1. Misr For Central Clearing, Depository & Registry Presentation
MCDR OVERVIEW
Misr For Central Clearing, Depository & Registry Presentation
AMEDA conference
Alex., April 27th -29th 2009
Mohamed S. Abdel Salam
Chairman & Managing Director
MCDR

2. Contents Introduction Mission MCDR Integrated Activities
Services initiated upon the international standards
MCDR Awards & International Recognition
Relations among Correspondent Business
MCDR Short term initiatives
Future Plans
Compliance to the International Recommendations
Useful Links
MCDR

3. Introduction MCDR – brief Overview
MCDR (Misr For Central Clearing, Depository & Registry ) was founded in 1994
Branches:6 branches in Cairo, Alex.&6th October
MCDR members
Securities brokerage firms.
Custodians Banks.
Banks and financial institutions authorized to work as securities intermediaries or as custodian or settlement members.
MCDR Participants
Securities issuers, Brokerage firms, Custodians, Direct Settlement, Registered Owners, Primary Dealers
Website:

4. Introduction Establishment
MCDR was established according to the provisions of the Capital Market law #95 of 1992 and within the framework of the programs adopted by the Capital Market Authority (CMA) for developing the capital market mechanisms and applying the central depository system in accordance with the international standards in this field.
MCDR

5. Introduction MCDR Profile Legal Type 100% Egyptian Joint Stock
Date of Establishment August 1994
Date of Operation October 1996
Authorized Capital 250 million EGP
Issued Capital 140 million EGP
Paid Capital 140 million EGP
Governed by Depository & Registry Law no 93 year 2000
MCDR

6. Shareholders structure
Introduction
MCDR Ownership
Shareholders structure
shareholder %
Banks- Custodians
(Member of central depository)
50%
Brokerage firms
45%
Egyptian Exchange 5%

7. Introduction MCDR Participants Type Number Issuers 1260 Brokers 157
Custodians 41
Direct Settlement 32
Registered Owners 7
Primary Dealers 14
MCDR

8. Mission In the past: MCDR focused mainly on:
Executing clearing and settlement of the daily stocks transactions in the Egyptian Capital market.
Finalizing central registry system for securities.
Providing investors with all information and data related to their accounts.
Managing the default risk through the settlement guarantee fund (SGF).
Guaranteeing the execution of financial or securities obligations.
Achieving stability and discipline in the market.

9. Mission
Reducing risks associated with delivering securities versus the value of the transaction.
Attracting foreign investor through applying the international standards (DVP).
Protecting securities investors against non-commercial risks.
Providing an auto match system matches online the trading system in the stock exchange with the clearing system in MCDR, Custodians and Brokerage firms.

10. Mission
Recently:
MCDR has conducted several initiative improvements to meet all market participants’ interests:
Well designed, clear, comprehensible and transparent legal infrastructure
Participating in IT company aims to provide Brokerage, Custodian firms with application systems in front and back office which are necessary to e-trade systems.
Managing the accounts of both cash and securities with the international institution for central depository (Clear Stream)
Establishing the automated system of the “Intra Day Trade” for active securities.
Protection of investor assets

11. Mission
Corporate governance structure providing balance between the interests of public and shareholders
Properly managed operational risk, business contingency and disaster recovery plans
Securities Lending/Borrowing practices
Efficient Cross-border settlement practices
Establishing the automated system of “Margin Trade” System and real time Gross settlement “RTGS”.
Providing accurate and timely information to the institutions rating Central Settlement and Custody institutions as well as market participants and auditors

12. Mission
Providing Digital signature services to benefit a wide sector of the electronic media users
Subscripting in the SWIFT as a service bureau to provide the company members and Middle East with the SWIFT service.
Enforcing the international relation with the external institutions “AMEDA”, “IOSCO”, “FEAS”, “CSDs and others.
Central Counterparty practices

13. MCDR Integrated Activities
RTGS
DVP
STP
OTHER
Settlement
Settlement
Guarantee
fund (SGF)
Central
Depository
Clearing & Settlement systems
Shareholder
list
Equities
Clearing
(traded Equities)
Fixed Incomes
Clearing
(Corporate &
Governmental
Bonds)
Central
Registry
(Beneficiary Owner)
Cash
dividends
Stock
dividends
Exchanged Trading Data with
EGX
Bond
redemption
Other corporate
action
Participants
Issuers
Custodians
Brokers
Direct
Settlement
Registered
Owner
Primary
Dealers
MCDR

14. Central Depository Central depository activities
all activities related to the depository of securities, clearing, settlement of financial position resulting from securities transactions, and the transfer of securities ownership through book entry, including:
The deposit of securities with the company or with any licensed entity.
The transfer of ownership by book-entry of securities traded among Central Depository Members.
The pledge of securities recorded by book - entry and financial position
The clearance and settlement of resulting from securities transaction 

15. Number of settled transactions executed on deposited and undeposited securities

16. Clearing and settlement system
The daily executed transactions ( buy and sell orders), are processed through MCDR system in preparation for the transfer of ownership of the product and the fulfillment of all obligations.
Executing the clearing and settlement transaction at the exact periods (T+2) , (T+1) or (T+0) upon its nature.
Settlement
At due date when the obligation is settled, then the ownership of the product is transferred. This process involves
Matching the buy and sell instructions
Renewing the product's ownership,
Transferring the related cash.
Transactions involving securities are usually settled on a delivery-versus-payment (DVP) basis..

17. Clearing & Settlement cycle
Dr. Securities acc. 7
Block for sale
Sell order
Broker 1
Custodian
Registry owners log
Check balance 2 3
Clearing between brokers 1
Cr. Securities acc. 7 4
MCDR
process
Broker 2
EGX
Clearing & Settlement
Process
Buy order
Executed trades 4 5 1
Inject net settlement amount
Clearing between Sett. Banks
Settlement Banks
Buyer acc.
Dr. cash
Bal.
Seller acc.
Cr. cash
SWIFT/Net Settlement 6 7
Net settlement
SWIFT notification 7
CBE
Dr. Settlement Bank 1
Cr. Settlement Bank 2

18. Central Registry Central registry Activities
All activities related to the bookkeeping of securities ownership, and of pledge of securities, including:
The maintenance of records with the names of owners of securities, the rights thereto, and the disposal thereof.
The distribution of entitlements of securities deposited with the company, including the principal amount, the proceeds, dividends, redemption value, and restructuring payments.
The publishing of any information and reports disclosed by issuers of securities, be it general or related to their securities.
The offering of services related to the issuance of securities on behalf of the issuer; and
   The exchange of securities upon the restructuring of the issuing entity.

19. Development of the registered issuer number

20. Settlement Guarantee Fund
The Settlement Guarantee Fund is committed to settle transactions executed at the stock exchange in case of delay or default of settlement by any of the trading parties.
SGF cover, cash default through financing the financial position
& Securities default through stock lending and borrowing
SGF positive role can be observed through the increase of the securities turn over rate as a result of the settlement of the member obligation defaults
SGF aims to facilitate.
Guaranteeing the execution of financial or securities obligations.
Achieving stability and discipline in the market.
The fund is committed to settle transactions executed in the stock exchange in case delay or default of settlement by any trading party.
Attract local and foreign investments.

21. SGF positive role in market

22. Services initiated upon the international standards
Dividends distribution service
MCDR Providing the distribution services for the dividends due on the deposited securities on behalf of the issuing companies (i.e. shares Dividends –Bond interest and redemption - …) , MCDR developed the distribution channels to satisfy the various customers needs
Dividends Channel
Home delivery
SWIFT
Bank transfers
Cheques
Cash dividends
Through 47
bank branch

23. Services initiated upon the international standards
Introducing SWIFT service
MCDR was authorized to set the SWIFT message standers of the NSMPG (National securities Market Practice Group) in Egypt.
MCDR subscribed in SWIFT as a service bureau for company members allowing them to benefit from all system’s advantages with lower cost.
The system aims to introduce the latest scientific means in the field of connection and exchange of massages and information among markets through authorized banks in different countries.

24. Services initiated upon the international standards
Corporate
Insurance companies
Banks
Broker-Dealers
Investment Managers
Stock Exchanges
Depositories
Trustees
Clearing systems
Payment Systems
Settlement Systems
Government Institutions
SWIFT Service Bureau (58 Brokers)
SWIFT Service Bureau

25. Services initiated upon the international standards
Introducing Short Selling service
A New Leveraged Vehicle for Securities Trading being Introduced in Egypt Managed by MCDR
The system allows investors who own securities and wish to keep them in order to gain a return through lending these securities to other investors, this leads to:
Increase the market liquidity;
Benefit for all related parties;
Increase the activity in the stock exchange as a whole.
The following chart reveal the process of short selling

26. Services initiated upon the international standards
Short Selling Process
Interest Income
Sell Order
Cash Collateral
Waiting Queue
Lending Pool
EGX
Trading
System
MCDR
Settlement
Borrowing
Broker
Short
Selling
Customer
Margin Calls
Initial Margin
Short Sell Order
Cash
Lending
customer
Custodian
Request
MCDR SLB System

27. Services initiated upon the international standards
Certificate Authority
The Certification Authority (CA) is the entity authorized by the Policy Management Authority to create, sign and issue Digital Certificates which built in accordance with the newest & the most secured international technology “ISO 27001” standards and it will provide a key role in the Capital Markets:
Protecting clearing and settlement system from fraud
Providing extra security for E-Trade instructions
Providing strong audit ability and legal enforceability of all transactions
Enabling online services for issuers and their investors
E-Trade Solution
E-Voting for company resolutions
Strong authentication of stock market participants

28. Signing using PKI Services initiated upon the international standards
Written signature
Unsecured documents` delivery
Late in documents` delivery
Availability of changing the contents
No verification of the signature validity
No verification of the document contents validity
No verification of time stamping
No verification of who exactly signed
Digital signature
Internet / intranet
Using smart card and personal pin code
Signing any document before sending
Signing data with Time stamping
verification of the signature validity
verification of the document`s contents
validity
verification of time stamping
verification of who exactly signed 28
Availability of storing signature & signed data
MCDR 28 28

29. Services initiated upon the international standards
Other services
MCDR initiate several services to meet the various market participant (Issuers ,Investors, ….)needs:
Shareholders list
Pledge
Repatriation
Call center
Internet
& post mail
SMS & Fax
E vote

30. MCDR AWARDS & International Recognition
JP Morgan assessment
MCDR was granted the highest level of efficiency with a score of 1.25 points on a scale of 1 to 3
MCDR built the Information Security System in accordance with the ISO standards
B.I.D. quality award in the Diamond category
For significant contribution to the business world, for high standing and professionalism demonstrated by prestigious performance
Thomas Murray Risks Assessment
MCDR was granted an overall A in Thomas Murray depository risks assessment that overall, Rating for Misr for Central Clearing, Depository and Registry (MCDR) is: A = Low risk
MCDR overall rating

31. TM Risk Assessment to MCDR
Overall, the Thomas Murray CSD Rating for Misr Company for Central Clearing, Depository and Registry (MCDR) is:
A = Low risk
The outlook for the rating is: Stable
CSD
Rating
Asset Commitment Risk
Liquidity Risk
Counterparty Risk
Financial Risk
Operational Risk
Asset Servicing Risk
Overall Rating
MCDR Rating: A A A A A A A
This Rating is for MCDR settlement, safekeeping and asset servicing operations

32. Relations among Correspondent Business
Africa & Middle East Depositories Association (AMEDA)
Japan Securities Depository Center, Inc. (JASDEC)
Thomas Murray
International Organization of Securities Commissions (IOSCO)
World Federation of Euro-Asian Stock Exchanges (FEAS)
Union of Arab Stock Exchanges
Central Securities Depositories (CSDs)
Association of Global Custodian
Association of National Numbering Agencies (ANNA)

33. MCDR Short term plans
Establishing the settlement system of the exchange traded funds (ETF) and the system of its related transactions:
Issuance of ETFs certificates.
safekeeping of the portfolio assets of the ETFs to be established.
Creation and redemption transactions of ETFs
Initiating an integrated system for clearing and settlement of the NILEX transactions (the Egyptian Exchange' market for growing medium and small companies) to provide an appropriate, secure, flexible movements for both companies & investors, together with an efficient and admission process.
Establishing an Effective risk management and corporate governance structures

34. Future plans
Implementing the clearing and settlement system of the derivatives market
Futures
Options
Developing the fixed income market
Settlement of Repo agreements.
Bonds short selling
Meeting the necessary requirements for obtaining a credit rate of (AAA) from the international rating agency “Thomas Murray”.
Cross-border movement of capital and funds
Increased cross-border securities trading
Integration among stock exchanges and clearing institutions
Full automation and STP
CCP and CMU Mechanism

35. Compliance to the International Recommendations
Compliance with G30 recommendations
Compliance with SEC17F7 requirements.
ISO standards
Full automation in communication and data gathering
Message standards and communication protocols
Securities Lending/Borrowing practice
Risk management and control processes
Synchronized transfer of cash and securities
Efficient business contingency and Disaster Recovery Planning
Fair and easy access to the system
Impartial, open and efficient corporate governance
MCDR

36. Useful Links Misr for Clearing, Central Depository and Registry (MCDR)
Capital Market Authority (CMA)
Egyptian Stock Exchange (EGX)
Egyptian Capital Market Association (ECMA)
Ministry of investment
Central Bank of Egypt

37. M.C.D.R
Thank you
MCDR