CAIRO: Egypt’s market regulator eased Sunday the rules and regulations for small and mid-cap investments on the Nile Stock Exchange (Nilex), the region’s first stock exchange for small and medium enterprises.
Companies who wish to be part of the new Nilex trading system for SMEs will not need a minimum capital requirement, with the maximum ceiling set at LE 50 million.
The EFSA has also assigned an independent judge to oversee the finances of the market to ensure that all companies are abiding by trading rules.
"We are preparing the market for what’s ahead," said Ashraf El Sharkawi, head of the Egyptian Financial Supervisory Authority (EFSA) at a conference after the trading session.
When it first launched, companies had to have a capital of at least LE 500,000 and a maximum of LE 25 million.
Easing regulations for small and mid-cap companies at this time is expected to create more jobs and facilitate the economic transition by increasing the confidence of local investors in order to encourage businesses as well as promote foreign direct investments in the Egyptian market.
"It is not smart to wait until tourism returns, for example, in order to renovate our airport. We can’t wait until investments come to boost the market, we must start now, and after the elections the economic situation will be clearer, hopefully," he said.
By establishing a new trading system, Nilex hopes to attract more investors and companies from the small and medium businesses.
Trading hours were changed from 10-30 am-11.30 am, whereas before the session lasted from 11.30 am-12.30 pm. Officials say this will help later on when they increase the number of trading hours.
During the conference, Ahmed Zein, president of Utopia Group, a medium size company specializing in real estate properties, expressed concerns regarding a request he had filed with Nilex regarding a capital increase.
"We applied months ago in order to raise our capital, a process that takes a week to be approved, [but it] has been over six months," said Zein, adding that it is an issue of bureaucracy that must be resolved.
"We still have not heard a response even after going through the regulations and putting together our paperwork," he said.
In response, Mohamed Omran, head of the Egyptian Stock Exchange, told Zein that he should meet with him after the conference in order to clear up the issue.
Sharkawy expressed the same concern asserting that previous dealings under the former regime would change in the future in order to facilitate procedures for companies, specifically small and medium ventures.
Last Tuesday, the Egyptian Exchange and the General Authority for Investment (GAFI) signed a memorandum of understanding for mutual cooperation in order to attract new SMEs for Nilex.
Omran emphasized that the new cooperation would allow the exchange to diversify their access to finance.
He stated that GAFI provided the exchange with a large database of potential Nilex candidate companies, according to a statement on the Nilex website.
Nilex, the Egyptian exchange market for growing medium and small companies, was founded in 2008. Currently, there are 20 listed companies that produce various products, from cement to food products.
Egypt’s main benchmark index, EGX 30 was down 1.93 percent on Sunday, ending at 4,298 points.
