New Alamein – The Egyptian Exchange (EGX) aims to launch an index compatible with Islamic Sharia law, between October and November, in cooperation with Standard & Poor’s (S&P).
Rami El Dokani, Chairperson of EGX, said that the stock exchange is working with S&P to launch an Islamic index.
He added that the initial shares that correspond to the Islamic index range from 20 to 25, explaining that the exact volume of the shares to be added to the index has not yet been determined.
The new index is expected to attract new investors, increase investment volumes in the stock exchange, and provide sources of income for foreign currency through various investment mechanisms.
The launch of an index compatible with Islamic law came upon on the requests of investors wishing to invest in the shares of companies whose business conforms to the rules of Islamic law.
Sharia-compliant financial systems create a suitable alternative for the traditional trading of stocks, as Islamic stock market indices target people wishing to invest in accordance with the guidelines of the Islamic economy, especially since these indices reflect the performance of shares subject to Islamic sharia (law) in their business model in each market.
He continued to explain that EGX is working to launch the futures exchange during the last quarter of this year, after completing all the necessary procedures. It is currently negotiating with about 10 financial institutions, including governmental and commercial banks, as settlement members, explaining they target four to five members to settle initially.
El Dokani added that the beginning will be futures contracts on the thirtieth index, provided that option contracts will be launched at a later stage. About 20 brokerage firms can comply with the terms of “brokerage licences” for the financial derivatives market.
He added that next year’s plan could also witness the launch of the first voluntary market for trading carbon certificates. He noted that the stock exchange is working hard and studying all the details of the market to ensure its success at the time of launch. It also plans to tighten the market at the end of this year or early next year.
He also pointed out that EGX encourages the private sector to offer proposals and is working hard to attract proposals from the private sector.
Additionally, he mentioned that cooperation with the Ministry of Youth and Sports includes several aspects, including discussing offering companies affiliated to the ministry in the Egyptian Stock Exchange. “We are pondering the possibility of offering the El Nady Club, but it became clear it is in the form of a ‘commission’,” said El Dokani.
In a related context, El Dokani said that EGX will activate the mechanism of borrowing for the purpose of “short selling”.
The Egyptian Exchange launched a promotional conference for investment in the new city “New Alamein” last Friday, with the aim of attracting new investors to the capital market.
El Dokani concluded that the stock exchange seeks to address everyone wherever they are, and change the mental image of the stock exchange that is limited to the rich only, touching on ways to benefit from the stock market as a tool for financing companies, and new investment tools in the Egyptian Exchange.
