Egypt’s Financial Regulator Chief:African Unified Stock Market Requires Suitable ICT Infrastructure
Dr. Ashraf El-Sharkawy, Chairman of the Egyptian Financial Supervisory Authority (EFSA), said the plan for establishing an African unified stock market lacks key requirements, especially a strong information and communication technology infrastructure. “Having a strong ICT infrastructure will contribute to supporting the creation of an African unified stock market,” El-Sharkawy added.
The EFSA Chairman also noted during an interview with ‘Amwal Al Ghad’ that having a unified stock market for all the African bourses does not require the formation of an independent entity. But it does require the provision of the basic elements necessary for the creation of the unified bourse.
Africa has its own rules for listing, delisting process and disclosures, and herein lies the key to making a unified bourse a reality, he explained.
El-Sharkawy described the timing of the16th Annual General Meeting and Flagship Conference of the African Securities Exchanges Association (ASEA) as fundamental, as it emphasizes Egypt’s leadership in holding such key periodical economic events for the continent. He further said that the importance of such a flagship conference lies in promoting the channels of communications as well as the cooperation among the African markets, so as to facilitate the investment flow.
Referring to the EFSA’s current priorities, El-Sharkawy stressed that it is vital to complete the organizational structure before the term of his chairmanship officially ends in June 2013. He said EFSA’s most important priorities also include the completion of all the technical details relating to the corporate sukuk draft law by December 2012, in preparation for its being referred to the Cabinet, after being approved by the authority.
El-Sharkawy also stressed that it has been suggested that the exchange-traded funds (ETFs) should be activated in Egypt by the beginning of 2013 after deciding on its final framework by the end of the current year. He noted that Beltone Financial (BTFH.CA) is the first firm to have launched the draft ETF prospectus, which is currently under review.
The EFSA Chairman asserted that the Egyptian market is unable to accommodate further financial instruments at present, as the existing instruments are appropriate amidst the instability and constant liquidity shortage.
El-Sharkawy explained that the current political instability has adversely affected investors’ appetite for trading in the stock market and accordingly the liquidity flow.
He referred to an economic researcher who has conducted a number of studies on certain global markets such as Britain’s. The researchers concluded that even football matches have an immediate effect on investors’ transactions.
As for the exploratory session, he emphasized the completion of all the necessary procedures. However, the EGX also needs technically upgrading before the session comes into effect. The EFSA has completed the Intra-Day Trading mechanism settings in the wake in the delay in activating the exploratory session, he added. The firms can apply for the Intra-Day Trading mechanism by the beginning of December.
El-Sharkawy noted that trading in stocks is not suspended every time there is some new news in the papers and portals. Only momentous news, such as a decree, adversely affects the stock market, he said
In the meantime, he denied that the price limit on the stocks has harmed the market in the current phase, as this limit should help protect the market against the severe volatility at present.
The EFSA Chairman concluded by saying that he expects that, provided we have a clear economic vision, the EGX and all the other financial institutions will witness stability.
