Foreign Securities Trading Ban; New Hindrance

Dr. Kamal Ganzouri’s decree on banning local brokerage companies from foreign securities trading has aroused multiple inquiries among securities companies which work in this field. Yet, other securities companies, which do not work in the field of foreign securities trading, have said the decree is important for imposing more rules in the Egyptian capital market.

A lot of brokerage companies have said they would incur dramatic losses in case of an immediate ratification of the prime minister’s decree. They described the decree as a further hindrance to the field of securities trading as those companies could eventually go into liquidation driven by other challenges which led to low trading volume and values since 25th of January Revolution.

“It is a shame and I think the decision was taken too quickly, without understanding the effects,” said Teymour el-Derini, a trader at Naeem Brokerage.

Hani Helmi, Chairman of Al Shorouk Brokerage Co. (SHB), has asserted that in case of decree ratification, a large number of brokerage companies would go into liquidation or seek an exit.

“These companies are highly dependable on foreign securities trading as a method of facing the current challenges the Egyptian market faces nowadays .” Helmi added

“SHB are one of those companies that work in foreign securities trading as the amount of these trading reaches 80% of the company’s total trades. This means SHB would not be able to continue in this sector anymore.”

“Dr. Ganzouri’s decree is random and ill-reviewed. It will lead to many drawbacks and downsizing.”

“If the decree really aims at preventing fund smuggling through brokerage companies, then this decree shall also be imposed upon the banks as well.”

Mohamed Anwar, analyst at Wedian Securities Stock Brokerage & Bookkeeping, said the decree would result in a multiple negative effects on a wide number of brokerage companies, which work in foreign securities trading in particular.

Mohsen Adel, Vice Chairman of EG-Finance, said the decree issued amid some activities made investors expose to risks authorities cannot monitor.

Ahmed Al-Ali, Chairman of Top For Brokerage, has described Ganzouri’s decree as sensible because it would avoid a lot of problems caused by the offshore funds, the Turkish and Cyprus in particular.

“This decree would limit transfers of hard currency abroad as the country is in pressing need amid the current circumstances.” Al-Ali added