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Thursday, 10 February 2022

New clearing company’s board formed in another step to joining Euroclear

Inching closer to “Euroclearable” status: The board of directors has been formed for our new central clearing and depository company, Egyptian Central Securities Depository (ECSD) in another step toward making local debt “Euroclearable,” Al Borsa reports, picking up a story from state-owned Middle East News Agency.

What’s this new company? ECSD — which is 70% owned by the Central Bank of Egypt (CBE) and 30% owned by the Finance Ministry — will manage registration, deposit and settlement procedures for government debt instruments. It will use a different system than the one used by Misr for Central Clearing and Depository (MCDR), though the two are currently working together, CEO and Managing Director Yasser Zaazaa was quoted as telling Al Borsa. ECSD has issued and paid-up capital of EGP 100 mn and authorized capital of EGP 1 bn.

Why do we care? ECSD’s establishment — which got the final sign-off at the end of 2020 — is a key step for Egyptian debt to be cleared in Europe under Euroclear. Having local debt cleared in Europe will make EGP bonds more accessible to foreign investors, who can currently only access the market through a small number of local banks. Making it easier for foreign funds to invest should translate into greater inflows into Egyptian debt.

The board: The nine-member-strong board includes five central bank representatives, two Finance Ministry representatives, and two independent members. Zaazaa was appointed managing director last year, when CBE Deputy Governor Rami Aboul Naga was also named non-executive chairman. Joining them are:

  • From the CBE: Central bank board member Tamer Eldakak, and Assistant Sub-Governors Zakeya Ibrahim and Ehab Nasr.
  • From FinMin: Vice Minister of Finance Ahmed Kouchouk and advisor Nevine Mansour.
  • Independents: Mohamed Youssef, and a final independent board member who has yet to be appointed.

Next steps: The company will begin operations in the third quarter of this year, Al Borsa quoted Zaazaa as saying (after the government irons out the final wrinkles — related to an unresolved “technical point” — in its discussions with Euroclear). The latest indications from the Finance Ministry are that we should expect our debt to become “Euroclearable” in the second half of 2022.

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