The settlement process:
1- Opening cash account at a clearing bank:
Each participant is obliged to open three accounts at one of the clearing banks which are National Bank of Egypt, Misr Bank, Misr Iran Development Bank, Arab African International Bank and Delta International Bank. These accounts are:
Current account - for participant broker.
Settlement account - for MCRD cash settlement.
Credit account - between the bank and the participant.
Both clearing banks do not charge any fees regarding managing the accounts of MCRD participants.
Each participant should have these accounts in different currencies dealt with such as Egyptian pounds and US dollars.
2- Feeding the accounts at the clearing banks:
Each participant deposits cash necessary for settlement in the clearing bank on SD-1 afternoon at 2.00 pm. Only on same day trading there is a prerequisite to deposit 5 million Egyptian pounds prior the trading session.
3- Main principles applied in the settlement:
- Settlement time frame is as follows:
RTGS for same day trading
T+1 for treasury bonds,
T+2 most active securities, and
T+3 for dematerialized securities.
- The clearing and settlement are done for each trading session on time and according to the rules set by MCRD and CMA.
- For cash settlement to take place, the DVP ( delivery versus payment ) principle is applied i.e. the settlement does not occur unless these two conditions are applied:
1- the seller delivers the securities.
2- the buyer deposits cash at the clearing bank.
4- The cash settlement process:
(1) On SD-1 afternoon, participants' cash positions are sent to MRSD through statement of accounts issued by the clearing banks.
(2) Cash balances are being entered into MCRD settlement system.
(3) On SD morning at 7.30 am., settlement is concluded.
(4) Settlement is completed when the two conditions are applied where the seller delivers securities and the buyer deposits cash.
(5) On SD morning the settlement results ( credits and debits ) are being sent back to the clearing banks.
(6) On SD morning, the clearing banks debts and credits the participants' accounts according to the statements sent by MCRD.
(7) ) On SD morning, the net cash settlement instructions is being sent to the Central Bank of Egypt to settle among clearing banks and finalize the settlement process ( irrevocable and final payment system)
(8) After the settlement is completed, each participant receives a settlement statement, either hard or soft copies it is being available on their accounts through the internet,
a detailed statement that indicates all transactions that have been settled at that particular session. Each transaction is indicated as follows:
( Transaction number - quantity - security type - value - MCRD clearing fee ).
(9) Each participant receives a statement of account indicating the participant's cash position which is identified by the clearing bank, the total value of the settled selling transactions, the total value of the settled buying transactions as well as MCRD clearing fees for each transaction and finally whether the ending balance is debit or credit.
10) In case there are suspended movements due to cash or securities defaults, the Settlement Guarantee Fund (SGF) intervenes on SD and starts its course of actions
Notice:-
The net settlement value in the statement of account should match the detailed statement and the statement sent by the clearing banks.
T stands for the trading session at Cairo and Alexandria Stock Exchange.
