02 Aug 2021

The EGX’s (Egyptian Stock Exchange) Board of Directors has approved new rules that will take effect in September 2021. The new rules are as follows:

1. Share Closing Price:
   Under the new system, first, there will be a pre-close auction sometime during the last 30 minutes of the trading day. If the auction is successful and results in a closing price, then that will be the official closing price. Traders will be able to buy and sell at that price for a few minutes before the end of the session, which is known as the trade-at-close period.
   If the auction does not attract enough bids and is therefore unsuccessful at achieving a closing price, then a 30-minute moving volume-weighted average (MVWAP) will be used to determine the closing price. The current system uses a volume-weighted average (VWAP) that is calculated using all the trades that occurred in the session.
2. Share Intraday Movement Range:
   For shares on the EGX (main market), share prices will be allowed to move in a range of +/−20% during a single session before trading is suspended. The current range is +/−10%.
   For shares on the NILEX (small- and mid-cap market), the range will be +/−10%.

Another change that is effective from today’s trading session is:

3. Shares Eligible for Same-Day Trading, Margin Trading, and Short-Selling:
   The number of companies on the ‘A’ List whose shares are eligible for same-day trading and margin trading with up to 100% collateral has been increased to 143 from 129. As for the ‘B’ List, which has the same permissions as the ‘A’ List but with up to 80% collateral only, the number of companies has decreased to 33 from 38.
   The number of securities eligible for short selling has increased to 63 from 53.

The new rules are more in line with the largest, most prominent exchanges in the world. Their goal is to boost trading volumes and attract more institutional investors, especially foreigners. These investors usually prefer having the option of trading after the auction, as well as working with the MVWAP system as it gives a more accurate closing price. The new rules will allow for instant execution of high-volume trades while offering a simpler and more cost-effective process.

(Source: EGX, Mubasher (English) (Arabic), Amwal al-Ghad (English) (Arabic), al-Youm al-Saabe, al-Masry al-Youm, al-Arabiya, al-Sharq al-Awsat,