ECSD implements a real-time settlement process utilizing a delivery versus payment (DVP) model 1 on a gross basis, executed in a trade-by-trade manner, which includes market fees and tax amounts if any.
Trade settlement is deemed final (irrevocable and unconditional) once the transfer of securities and financial positions occurs simultaneously between the custodians involved in a trade.
ECSD provides flexible settlement cycles ranging from T+0 to T+5, emphasizing that the settlement of the trade must occur on the agreed contractual settlement date between the two parties in accordance with the settlement mechanism of EGX Electronic Trading Platform ETP system, without any recycling option for pending trades; otherwise, the trade settlement will fail. As a result, fail settlement fees will be imposed on the defaulting party, in addition to market fees applicable to both custodians.
The trading of government debt securities is conducted on the EGX Electronic Trading Platform (ETP). Upon the execution of a deal, ECSD receives SWIFT settlement instructions (MT541/3) from EGX containing the trade details. The Clearance, Settlement and Depository (CSD) system automatically matches these instructions and transmits corresponding matching confirmations via SWIFT messages (MT548) to both custodians and EGX. On the contractual settlement date, following trade affirmation by both custodians, the CSD system checks the availability of securities. Subsequently, the CSD system generates MT202/103 to the Real Time Gross Settlement (RTGS) system at CBE to facilitate the settlement of the cash leg of the trade.
Once the RTGS system provides the payment confirmation SWIFT message (MT012) to the CSD system, the CSD system concurrently settles the securities leg on both sides and dispatches settlement confirmation SWIFT messages (MT545/7) to both custodians and EGX.
A Repurchase Agreement (REPO) serves as a short-term financing mechanism that signifies an agreement between two entities (the buyer and the seller). In this agreement, the seller commits to sell securities to the buyer, to repurchase them on a predetermined future date. REPO transactions are frequently traded on the ETP platform at EGX.
REPO transactions can be executed either through free of payment (FOP) or through delivery versus payment (DVP).
• REPO FOP with tax trigger.
• REPO FOP without tax trigger.
• REPO DVP with tax trigger.
• REPO DVP without tax trigger.
EGX Cancellation Request Cycle:
A bilateral cancellation may be executed up to settlement date till 2:25 PM . Traders who have conducted the trade on ETP are required to submit a bilateral cancellation request to EGX for approval.
Once approved, EGX sends cancellation SWIFT messages (MT541/3) to ECSD. As a result, the trade is automatically canceled upon the CSD system's receipt of the SWIFT messages.
Additionally, both custodians and EGX receive confirmation of the cancellation via SWIFT messages (MT548). T+0 trades can be canceled on the same day before 2:25 PM following the same procedure, provided that the settlement process has not yet been initiated on the CSD system.
Expired Trades Cycle:
On the contractual settlement date, if the trade status shows any pending issues such as (pending stock, pending settlement provider, pending cash limit, or pending affirmation), an (MT548) message detailing the pending reason will be dispatched to both participants and EGX.
If the trade status does not change by the conclusion of the settlement window (3:30 PM Cairo local time), the trade will automatically expire, and corresponding (MT548s) will be sent to custodians and EGX. Fail settlement fees will be imposed on the defaulting party, in addition to market fees charged to both custodians.
