Regulations and Framework:
The primary regulatory body is the Capital Market Authority (CMA). It is responsible for the issuance of licenses to all financial intermediaries including the Central Clearing and Depository which is a company called Misr Clearing Settlement and Depository (MCSD). The CMA is also responsible for the introduction of and amendments to any laws and regulations geared towards the efficiency and transparency of the market.
The Exchange is responsible for market monitoring and trading to ensure secure and efficient trading as well as the protection of minority rights. It is the executive arm in charge of implementing the procedures decreed by CMA as well as those mandated by its board of directors. The exchange ensures that all listing and reporting requirements are met by those companies whose shares are listed there. It is also responsible for the over the counter market (OTC). In October 2006 the exchange issued membership rules for financial service providers regulated by the Capital Market Law.
Clearing and Settlement lies in MCSD's domain. The company ensures the successful clearing & settlement of all trades and intervenes in the event of failed trades. MCSD is a private company whose shareholders are primarily comprised of banks, brokerage houses and the exchange itself. The law requests borkerage & firms & clearing agents to be members with MCSD and such membership means they must also be shareholders on prorata basis derived from their market share
Together, these three arms work to ensure the market operates in an efficient, timely and transparent manner.
The Capital Market is regulated by law 95 of 1992 and its executive regulations which are available at the following links:
Exchange Membership Rules
Current efforts & future plans of the Capital Market Authority:
The CMA lunched a new development plan in the last five years focusing on the minimization of market risks facing investors aiming to raise investor?s confidence in the Capital Market
The CMA?s plan is based upon three main programs:
1. The increase of closer monitoring of trading activity enhancing the efficient application of the stock market regulations through the Capacity Building Program.
2. Facilitating the intermediary companies & brokers preformance through the Intermediates Support Program
3. The development and strengthening of Capital market?s backbone through the Infrastructure Development Program to enable efficient transactions.
The efforts toward practicing market activity abiding by the international measures of the IFRS.
- The launch of the improvement of stock market awareness:
- The spreading of information by media and television
- CMA call center
- New electronic website for CMA
- A website for investor awareness
The improvement of the Executive Regulations of the Capital Market Law:
- The CMA Strategic Mission consists of new points:
- Resourcefulness and Efficiency
- Commitment to Excel lence
- The continuous improvement of the monitoring program of the CMA.
- The regulating of medium-term and long-term loans.
- The encouragement of the awareness program.
- The continuous efficiency of the CMA in accordance to the international market.
Recent Developments of the Capital Market Regulations
During the past few years as the market grew there were some changes made to enhance the market?s 3 arms efficiency
Same Day Trading is defined as buying and selling the same security on the same day, i.e. during the same trading session. It is a facility that most developed stock exchanges offer to their investors to enhance the market liquidity and efficiency.
Day traders rapidly buy and sell stocks during the day to benefit from the slight price fluctuations throughout the session, allowing them to lock in quick profits in short terms. This in turn, will increase the volume and the value traded on the stock and hence increases its liquidity.
Same day trading also protects the investors from uncertain long term price movements.
However, Same Day Trading has been and still is a debatable issue among stock market specialists because of the high risk it involves. Day traders usually suffer from financial losses in the first months due to lack of experience in price movements patterns and trading techniques, in addition to the risk they are taking if keeping the stocks overnight without a proper study of the possible price movements.
Cairo Alexandria Stock Exchange started to apply the same day trading system in 2005 as to improve and enhance market attitudes, giving more deepness & higher trading value to in market traders and investors.
· The continuation of strengthing applied regulations for Money Laundering. Egypt was removed from the non cooperative countries list for combating of money laundry.
· The beginning of the Capacity building Program :2004-2008
· The practice of the international stock market code rather than a different one.
· The c lose monitoring of money laundry
· The establishment of electronic trading allowing foreign investors to become active in the Egyptian stock market exchange.
· The encouragement of the Governmental bonds.
· The release of the regulation no. 93 of the year 2000 ? (Custody & Clearing).
· The insurance made for the investors in protection of their rights while dealing with brokerage companies.
Dr. Hani Sarie El Din
Mr. Alaa Amer