Egyptian Exchange’s new strategy focuses on developing financial rules
Ahmed El Sheikh, the Chairperson of the Egyptian Exchange (EGX), said that the stock exchange plays a vital role in supporting the national economy.
He added that EGX has developed its strategy for the new year based on seven main pillars, which include 61 items that cover the overall framework of the market.
The most important of these items are developing financial rules and promoting financial literacy, in coordination with the Financial Regulatory Authority (FRA).
He made these remarks during his speech at the opening sessions of the eighth annual capital markets summit, organized by Media Avenue under the theme of Structural Reforms… Sustainable Development. He stated that the main goal of EGX is to provide strong tradable securities that benefit the listed companies.
He said that having a large number of listed companies is not enough, as they need to be actively traded.
He noted that in the past, there were about two thousand listed companies, but only a small percentage of them were tradable.
El Sheikh revealed that EGX is working to improve the trading mechanisms of securities, in collaboration with the FRA and based on the market feedback.
He explained that some of the changes included the new market segmentation system, which replaced the previous system that divided the market according to the basic indicators, such as the thirtieth, seventieth, and percentile index, and the activity level, such as the main market, the small and medium enterprises market, and the companies with a 5% price limit.
He emphasized that the new system will rely on a single segmentation that evaluates the market activity as a whole, more clearly, and where the indicators have been merged into one percentile index, measuring the most active companies in the market. He also said that the market will be divided into an inactive market, and a moderately active market in between.
El Sheikh added that EGX has made amendments to the customer registration system on the stock exchange, after receiving many complaints from foreign investors about the repeated requests for the same documents. He said that EGX has coordinated with the FRA to simplify the procedures and reduce the time they take.
He pointed out that with the new developments and the existence of two central depository and registration companies, EGX has made amendments to the system for suspending dormant accounts, to avoid any conflict between the two companies, and to extend the suspension period to 24 months instead of 12 months.
As part of its strategy for the current year, EGX announced its plan to launch a new market called “Development Market,” where the trading rules will be set according to the request of the issuing company, and where direct listing can be done, especially for companies that are forced to delist, to make the exit process easier for those who want.
According to the strategy, controls will be applied to the operation of this market, so that it does not harm the companies’ listing operations, regarding the bidding method and the number of trading days per week while setting a maximum limit for the quantity and value of operations based on a specific percentage of issued shares and a specific value for operations.
El Sheikh revealed that the Egyptian Exchange paid great attention to the investor relations file, given companies’ awareness of the pivotal role they can play in communicating with stakeholders and research centres, and the need for them to know the difference between information that can be disclosed and information that must be confidential.
He added that the EGX held personal interviews and tests for investor relations officials, and this was followed by organizing training courses for them. What is noteworthy is the high demand for these courses by the officials, whether they passed the tests or not.