FRA publishes 6 recommendations to revitalize the Egyptian stock market

REUTERS-Traders work at the Egyptian stock exchange in Cairo

CAIRO – November 17, 2021: The Financial Regulatory Authority (FRA) held a meeting to discuss ways to improve the business environment and control transactions on the Egyptian Stock Exchange.

According to the meeting, FRA made six recommendations, including:

1- Recommend the submission to the Authority’s board of directors to consider granting an additional period to implement the Authority’s decision concerning the margin purchase rules until the completion of the electronic systems, with the application of the new rules relating to the margin up to Misr for central clearing, The Custodian and Register (MCDR) completes the preparation of the automated systems.

The deadline has been set at six months maximum, subject to the brokerage firms complying with the rules for buying margin in force in accordance with the decisions which govern them, stressing that the new rules relating to margin will not result in any liquidation. positions at the start of the request.

2- Underlining the brokerage firms and depositaries of the need to study the solvency and the degree of risk of the securities subject to the purchase on margin and any guarantees and to follow the principles of risk management in order to reduce the degree of risk to customer and safety as well.

3- Study the proposal submitted by the Stock Exchange concerning the rules for buying on margin at the level of the brokerage firm and the values ​​of the guarantees provided by the securities.

4- The Authority will complete discussions with the Stock Exchange regarding price limits, in particular on stocks presenting high risks and unusual price fluctuations, and will examine the possibility of setting different price limits for them, and the measure in which they can be reduced on certain equities depending on the risk rate of price fluctuations and the percentage of margin purchases thereon.

5- The Egyptian Stock Exchange will study the adjustment of the closing price to be associated with a minimum execution value in addition to the time component.

6- Professional companies convene a meeting of brokerage firms and depositaries to activate the role of risk management when granting financing for the purchase of margin securities and activate the role of their internal control.

The FRA meeting was held this afternoon at the Authority’s headquarters in the Smart Village, chaired by Islam Azzam, vice-president of the Authority, and in the presence of the president and vice-president of the Bourse Egyptian, and of the two management of the members of the Misr clearing company with the members of the capital market advisory committee.

Mohamed Omran, Chairman of the Financial Regulatory Authority, participated in some of the aforementioned discussions to discuss the developments that the Egyptian Stock Exchange is going through.

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