CAIRO: At the recent meeting of the Union of Arab Stock Exchanges (UASE), the CEO’s of securities exchanges from Morocco to Oman agreed that in order to strengthen Arab markets, security must become top priority.
Unlike most global markets, where “regulation has become the word of the year, Arab market heads largely agreed that their relatively traditional exchange systems, still innocent of derivatives trading, would only be hobbled by extensive regulation.
To deepen liquidity they must attract institutional investors and encourage cross border trading, they said.
However, the current IT operation systems and exchange rules used by each Arab market comprise differences significant enough to constitute a “language barrier, preventing the securities markets from the possibility of partnership.
Delegates reached near consensus that the time had come for Arab markets to communicate, integrating through a software hub that will standardize rules, practices and information for each exchange.
Mubasher Chairman Mohamed Rashid Al Ballaa presented his company as a candidate for the hub.
Mubasher is a brokerage firm and e-finance service provider currently offering stock information, analysis and real-time updates, and is preparing to expand its products. One tool that interested delegates is the Mubasher Total Brokerage Solution (MTBS), a screen with projections of data from each Arab capital market and the major international exchanges.
Fidessa Group, one of the world’s largest providers of services, software and trading systems for financial markets, announced partnership with Mubasher on December 13.
The partnership will offer direct market access to all GCC markets and selected Arab markets (including Egypt) to those brokers already operating on Fidessa’s global connectivity network.
AMEinfo quoted Nick Wright, head of institutional brokerage at Mubasher Financial Services (MFS), as saying, .Our current plans include expansion into every Islamic market. Working with Fidessa, with its global reach and reputation, is an important step for us in opening up the Middle Eastern markets to the sell-side and buy-side globally and we look forward to building a strong partnership with them in the future.
Arab e-trading
Proposed Arab e-trading through a single hub will require Straight-Through-Processing (STP) or securities trading that occurs on a computer without manual intervention. Mubasher intends to provide STP through its Software as a Solution (SaaS) service in which IT requirements are outsourced from the individual exchanges, putting the responsibility for IT on a third party company.
Although concerns surrounding a third party company taking control of the IT system for the markets of the entire region are likely to arise, the company was welcomed as a needed innovation.
After addressing the UASE conference, Mubasher’s chairman seemed to have convinced delegates that his software provided the optimal blend of technical integration without requiring extensive legal or political cooperation.
Mubasher’s General Manager Mahmoud Hassan answered questions on his company’s product while attending the conference.
“What service do we provide? It depends what the client wants. We can give regional information or country-specific data on securities. We offer technical analysis of markets as well as real-time price of equities. We have Mubasher Mobile for mobile updates, Mubasher Net, we will soon launch Mubasher FN.
Hassan voiced more concerns about Mubasher’s ability to sufficiently develop Arab markets’ liquidity, security and transparency. He acknowledges that a software and analysis provider cannot engender the deeper shift in the mindset of Arab investors that will be necessary before the markets can perform at international standard.
“Arab markets will remain subject to fluctuation until a critical mass of institutional investors can override the effects of retail investors’ anxieties. Individuals are nervous, whereas institutional investments are managed by professionals and thus are less sensitive to market fluctuations, Hassan explained.
He opined that the media plays a negative role in creating an environment conducive to the long-term investment required by Arab markets. “The media is playing a bad role in getting cash to markets. It always gives stories about some investor going crazy with bad news from the stock market and killing his wife and kids.
“To change the mindset that currently prevails, which tends to panic, people need to be educated and trained in investment and market research. Right now people buy when they hear a tip from their neighbor and sell if they hear the price is decreasing. The idea of putting money into long range projects like infrastructure doesn’t exist.
He complained that producing financial statements and market analysis is essentially a waste of time with most retail investors, as they do not pay attention and have no effect on their decisions.
“It’s not that media shouldn’t report what happens, he conceded, “but they have to provide the whole picture.
Regardless of the prevailing investor culture, Mubasher is bringing Arab investors to a global platform whether or not they’re ready.
