The Egyptian Financial Supervisory Authority (EFSA) finalised the amendments to the draft law 95 of 1992 to establish a commodity exchange in the Capital Market, and intends to discuss them with the parties of the capital market in the coming days, chairperson of the authority Sherif Samy told Daily News Egypt.
He explained that the new regulations of the law are designed to regulate the relationship between the parties that deal with trading goods contracts, which include the exchange market itself, the suppliers of goods, brokerage firms, and traders of these contracts.
Samy revealed a number of features of the regulations included in the draft, such as establishing a joint company to establish the commodity exchange market.
The regulations did not assign a specific party to establish the commodity exchange. It is possible to assign it to the Egyptian Exchange (EGX) or any subsidiary of the Ministry of Supply and Internal Trading.
It makes sense to let the EGX establish and organise the commodity exchange given its experience, said Samy.
He explained that the regulations allowed the financial institutions to engage in brokerage activity of commodity contracts by obtaining a licence, not through establishing a new company under the conditions of membership, financial solvency of the companies and the rules of trading goods.
The regulations will not set specific years of experience in commodity trading for brokers, but will depend on passing the training courses organised by the Institute of Financial Services, and obtaining an operating licence. While management and managing director rules require years of experience in the capital market field in general.
Executive regulations of the Capital Market will determine the details of the maximum daily rate of the goods’ price changes.
Following the community discussion about the rules of the commodity exchange, the authority will submit it to parliament, in coordination with the Ministry of Supply, and ask parliament to put them as a priority.
According to data released by the Ministry of Supply, the commodity exchange will initially include eight commodities, including six agricultural commodities such as wheat and corn, besides oil and gold.
The ministry said the target of the exchange is to protect the small farmer from price fluctuations and provide good prices by creating local and foreign demand, especially as 60% of the agricultural holdings areas in Egypt are less than an acre.