New Rules for organizing Stock Exchange Market to be taken

Many local and world experts believe that the recent organization decisions in the Capital Market Authority (CMA) including introduction of the system of key dealings in the government stock exchange market and canceling the daily ceiling movement of the most active 12 shares, would contribute to accelerating transfer by the Stock Market in Egypt to dealing criteria and systems which are known in world market. This would turn the Egyptian Stock Exchange (ESE) into one of the most active stock exchanges in the region, they added.

ÊÊÊ In spite of the measures that have been belatedly taken, reaction in the market was not commensurated with the level expected by experts and officials as pessimism and caution are still characterizing the steps of dealers. Attempting to explain the measures recently taken, Abdul Hamid Ibrahim, CMA chairman, referred to the measures taken in year 1992 for reactivating the stock market in Egypt. He said those measures were coupled with financial and monetary reform measures for completing the stock market system.

ÊÊÊ Ibrahim noted that the Minister of Foreign Trade, the CMA and the ESE are currently examining measures for regulating the work of the stock exchange market. Among these measures, he referred to the registration rules in the ESE that should be restricted to the active companies open before the public. He said the registered companies should be committed to the rules of disclosure and transparency as these companies should also have a special monitoring system and auditors who must act as neutral between shareholders and prospective investors.

ÊÊÊ The decision of cancelling the price ceiling of the daily movement of shares prices capitalizes on the idea that so long as shares are active, their dealings should be left to the supply and demand forces.

ÊÊÊ Ibrahim said the practical application of the rules organizing the ESE would be applied as of next October together with adopting the rules of the key dealers (wholesale dealers) in the government stocks.

ÊÊÊ The policy of ensuring investors against non-commercial risks has been proved to be successful as the experiments have confirmed the success of the settlements guaranteeing funds, Ibrahim noted. He underlined the need for accelerating the introduction of a mechanism for settling conflicts in the stock market, referring to the success of such a mechanism in many Arab states where it settles conflicts within a maximum period of four days.

ÊÊÊ He also called for the introduction of a new kind of investment funds that combines between investment in stocks and commercial bills, Ibrahim concluded.