Egypt’s Central Depository System Chairman: African Unified Bourse; Not ‘Impossible’ Dream but Quite ‘Distant’
Mohamed Abdel-Salam, the Chairman of Misr for Central Clearing, Depository and Registry, noted that the MCDR has begun to take positive steps towards linking up with its counterparts in Morocco and Tunisia.
He told ‘Amwal Al Ghad’ that this comes in the wake of a decree from the Africa & Middle East Depositories Association (AMEDA) stressing the need for the GCC countries and the North Africa region to be linked with Egypt’s MCDR, as well as the other African securities depository centers through South Africa’s Strate Ltd.
Abdel-Salam stated that MCDR has already managed to link up with South Africa’s Central Securities Depository (Strate), which is currently following up the transactions carried out by the investors in the Egyptian and South African markets, he explained.
The MCDR Chairman said Egypt has started to link up with southern Africa countries, especially because of their key role in linking with other African markets. The MCDR will therefore continue linking up with the Arab securities depository centers.
Abdel-Salam referred that the MCDR has also managed to link up with a number of Arab countries such as Lebanon, Kuwait and Abu Dhabi. MCDR is currently working on linking up with the other Arab countries and the North African region, he noted.
He also emphasized the importance of communicating with the African markets in order to provide and exchange expertise. In fact, choosing Egypt to hold ASEA’s 16th conference is a positive move, which will contribute to the exchange of more expertise, leading to the signing of further agreements with key markets and alluring more investors.
Meanwhile, the MCDR Chairman pointed out the importance of having joint trading between the Egyptian Exchange (EGX) and the Istanbul Stock Exchange (ISE) and of the signing of a memorandum of understanding between the two bourses. Joint trading will enable Turkish investors to trade in the EGX and the agreement will allure more firms for each market.
When asked about the unified African bourse proposal, Abdel-Salam said its implementation is not impossible, although there will be many difficulties, especially the dissimilarities between the levels, systems and regulations of each of the African bourses, which will make the creation of a unified bourse with its own regulations a formidable task.
Referring to the cancellation of the precautionary procedures in the EGX, Abdel-Salam said the financial instruments and mechanisms including the T+0 are ready, awaiting the Egyptian Financial Supervisory Authority (EFSA)’s accreditation for activation in the light of the recent amendments. The T+0 mechanism started in October 2005 and most investors have been trained in it.
The MCDR Chairman stated that the market needs more financial instruments so as to reactivate the volume of trade.
“While I was serving as the EGX Chairman after the 25th January Revolution, I suggested cancelling all the precautionary procedures when the EGX resumed trading a month later, but the EFSA rejected this idea,” Abdel-Salam added, explaining that the MCDR has also prepared the hedging mechanism which again awaits the EFSA’s accreditation.
He stressed that the mechanism will enable the investors to hedge against the low prices and to secure their investments in stocks.
Abdel-Salam said the MCDR has finalized the trading rights issue mechanism and has received applications to apply it from the NILEX-listed Al-Moasher for Programming and Information Dissemination (AMPI). The trading rights issue mechanism has started to come into effect for Al-Moasher as a result of capital increase through its existing shareholders.
The MCDR Chairman also emphasized the importance of the subscription rights mechanism for organizing and ensuring justice among the shareholders during IPOs and subscriptions. The subscription rights mechanism works on preventing the dominance of a certain bracket of shareholders during the opening of the second tranche of the IPOs, which allows all the shareholders to buy any amount of shares, unlike the first tranche.
Abdel-Salam added the MCDR has finally managed to obtain the licenses to provide a five-year e-signature service. The MCDR is currently working on signing the service with around 104 brokerage firms, he added, stressing that the number of the subscribed firms will likely increase, especially those depending on online trading.
