The Financial Regulatory Authority (FRA) approved the Egyptian Exchange’s (EGX) proposal to expand the use of the reverse execution mechanism, along with other mechanisms, to correct trading violations while neutralising the impact on the closing price.
This step comes within the framework of the two parties’ keenness on maintaining the stability of markets and security of transactions by implementing mechanisms that avoid market disruptions and violations of the provisions of the laws and decisions.
Through these amendments, the two parties look forward to addressing, correcting, and removing the consequences of violations before taking legal measures.
This would happen by adopting and applying the principle of gradualism in correcting violations — an approach that ensures the stability of the market — along with protecting the rights of all dealers.
The market responded quickly to the news, recording a trade volume of about EGP 1.44bn through 189 stocks at a quantity of 1.3bn shares, bringing the market capital of the listed shares to EGP 673.5bn at the end of Sunday’s trading session.
Mostafa Al-Kurdi — Head of a group at the Arab African Stock Exchange — said that the impact of the decision on the market is not clear yet. However, there are positive steps from the FRA’s side that aim to revitalise the capital market.
He also pointed out that there is great optimism about performance during the coming period.
Moreover, Al-Kurdi added that the shares of the EGX 70 index have a better performance than the EGX 30 index, targeting the level of 2,200 and then 2,350 points, in addition to high liquidity in those shares.
He advised investors to stay away from buying on the margin at presently and being selective of stocks.
