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Monday, 13 May 2019

Euroclear is looking to tap domestic banks to help settle government debt

EXCLUSIVE- Euroclear is looking to tap domestic banks to help settle government debt: Belgium-based clearinghouse Euroclear is to select a number of local banks from among primary dealers to assist in the settlement of government debt, a senior government official told Enterprise. Chosen banks will be among those with the highest holdings of government debt and whose systems align best with Euroclear, the official said. Misr for Central Clearing, Depository and Registry will also play a role, our source added, but declined to provide further details. Amendments to the rules governing the primary dealer system will necessary to allow the banks to operate in the primary and secondary market through the Euroclear system.

Background: The Finance Ministry signed an MoU with Euroclear last month to make EGP-denominated debt Euroclearable. Having domestic debt available on Euroclear will facilitate settlement for overseas investors, who can currently only access the debt market through a few local banks licensed to operate as primary dealers. Finance Minister Mohamed Maait, who opened talks with Euroclear last September, said that Egypt will not issue yen- and yuan- denominated bonds — or green bonds or sukuk, for that matter — before the next fiscal year to give the government more time to prepare and comply with Euroclear regulatory requirements.

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