BEIRUT

Regional

Egypt lifts law against trading foreign stocks

CAIRO: Egypt’s financial regulator, has lifted a ban on brokerage firms and fund managers trading shares listed overseas, as part of a broader effort to invigorate the country’s financial markets.

The watchdog introduced the ban in June 2012, claiming such deals exposed investors to unmonitorable risks. At the time, traders said the restriction could be aimed at limiting transfers of hard currency abroad.

Egypt’s foreign reserves have shrunk significantly since the 2011 uprising that swept longtime ruler Hosni Mubarak from power. Reserves stood at $17.307 billion in February, down from around $35 billion before 2011.

Much of the activity in Egypt’s capital markets dried up during the political instability that followed the toppling of Mubarak, although the stock market has since rebounded.

The new rules, effective immediately, allow brokerages and fund managers in Egypt to trade foreign shares on behalf of non-Egyptian investors who do not reside in the country and who use financing from abroad, said Sherif Samy, chairman of the Egyptian Financial Supervisory Authority.

Egyptian firms remain banned from trading stocks that are not listed in Egypt on behalf of local investors or on their own accounts.

However, the rules do allow brokers to trade global depository receipts listed on stock exchanges abroad on behalf of local investors.

The move is aimed at allowing Egyptian financial institutions to serve foreign clients by executing transactions in markets in the region such as Saudi Arabia, the United Arab Emirates, Jordan and Bahrain.

“Companies wishing to trade foreign shares that are not listed on Egypt’s bourse will commit to obtaining prior approval from [EFSA],” Samy said.

Brokerage firms welcomed the decision, which is expected to enable them to boost revenues.

“This decision is 100 percent right,” said Mohamed Ebeid, co-head of securities brokerage at EFG Hermes, one of the Middle East’s largest investment banks.

“The decision will return Egyptian brokerage firms to work within the whole region once again.”

In an effort to boost trading and attract more investment, EFSA introduced new regulations last month for companies listed on the Cairo stock exchange.

Egypt’s benchmark index lost as much as half its value in the months that followed Mubarak’s toppling, but activity on Cairo’s stock exchange bounced back after the army deposed former Islamist President Mohammad Morsi.

The index reached a five-and-a-half year high last month at over 8,100 points, around 12 percent above its level on the eve of the anti-Mubarak revolt.

 
A version of this article appeared in the print edition of The Daily Star on March 06, 2014, on page 6.

Recommended

Advertisement

Comments

Your feedback is important to us!

We invite all our readers to share with us their views and comments about this article.

Disclaimer: Comments submitted by third parties on this site are the sole responsibility of the individual(s) whose content is submitted. The Daily Star accepts no responsibility for the content of comment(s), including, without limitation, any error, omission or inaccuracy therein. Please note that your email address will NOT appear on the site.

Alert: If you are facing problems with posting comments, please note that you must verify your email with Disqus prior to posting a comment. follow this link to make sure your account meets the requirements. (http://bit.ly/vDisqus)

comments powered by Disqus
Summary

Egypt's financial regulator, has lifted a ban on brokerage firms and fund managers trading shares listed overseas, as part of a broader effort to invigorate the country's financial markets.

Much of the activity in Egypt's capital markets dried up during the political instability that followed the toppling of Mubarak, although the stock market has since rebounded.

The new rules, effective immediately, allow brokerages and fund managers in Egypt to trade foreign shares on behalf of non-Egyptian investors who do not reside in the country and who use financing from abroad, said Sherif Samy, chairman of the Egyptian Financial Supervisory Authority.

Egyptian firms remain banned from trading stocks that are not listed in Egypt on behalf of local investors or on their own accounts.


Advertisement

FOLLOW THIS ARTICLE

Interested in knowing more about this story?

Click here