Ashraf Al-Sharqawi, president of the Public Financial Supervisory Authority, said the authority would not allow for stock options, derivatives, futures and other high risk financial instruments to be traded on Egypt’s stock exchange.
He added that the refusal to allow these instruments not only stems from the fact that they contradict Islamic law, but also because Egypt does not currently possess the necessary infrastructure to support their exchange.
He went on to say that the stock exchange is not yet ripe enough to begin implementing such instruments, especially considering that many of them were responsible for causing the global economic recession five years ago. He said that right now Egypt would focus on developing and strengthening measures.
He further stated that talk regarding high-risk instruments was nothing but contrived hype for the media.
Regarding the stock exchange agreement that allows the listing of EGX30 futures on contract on the New York Stock Exchange (NYSE) and Liffe in London, Al-Sharqawi added that the agreement stipulated that this would be done in London and not Egypt.
He added that the agreement would make Egypt’s index one of the largest in the world listed on London’s stock exchange, which also holds the largest amount of Egyptian stock in the world. Al-Sharqawi further went on to say that the agreement would reflect positively on the local performance of the Egyptian index and its ability to secure larger amounts of liquidity from investors via arbitrage between the London and Egyptian stock exchanges.
