Stock Exchange Intra-Day Trading Me

The Egyptian Financial Supervisory Authority (“EFSA”) issued Decision No. 67 of 2012 to amend the mechanism of “Intra-Day Trading” (the “Decision”).[1] The Decision allows for the intra-day trade of securities listed in the stock market but in accordance to new rules, it also stipulated that the stock market and the central clearing and depository registration are responsible for preparing the mechanism and technical requirements for creating these new rules and gives the stock market the power to put in place a new system to supervise trading and interfere to annul illegal trades. The central clearing and depository registration may also settle immediately positions resulting from intra-day trade and is to notify EFSA of whatever trade procedures have been made on daily basis. The Decision stipulates that stock broker firms desiring to work according to these new mechanisms must acquire an approval from EFSA after fulfilling the condition listed in this Decision. The details of this Decision are presented below.

Large Awaited Mechanism

The required conditions in Stock Broker Firms are as follows:

• The firm must be categorized in class (A) by the central depository company;

• The firm must implement the corporate governance system issued by EFSA;

• That no sanctions have been enforced on the firm for a period ranging between 3 to 6 months depending on the type of the sanction;

• That no final court decisions have been issued against the firm in the last five years;

• The firm must present two audited financial statements from a certified auditor;

• The firm must deposit at least 25% of the value of its potential dealing with a minimum of one million pounds in any bank;

• The company’s management be specialized and fulfil the conditions stipulated in the decision.

Brokerage Firms Obligations

Brokerage firm working according to the new mechanism must follow these rules:

• Notifying EFSA in case of any change in the information that company was listed under;

• Dealing in accordance to the contracts issued by EFSA;

• Every contract the company signs must be annexed by a copy of the new rules and a disclosure form, disclosing the risks related to it and to investigate the financial capacity of each client.

General Regulations for Intra-Day Trading

• Trade can only happen on securities that fulfil the criteria specified by EFSA board of directors;

• A client may not deal on more than twenty percent of shares listed to the company;

• The procedure must be after the client’s approval issued through a specific form;

• Buying whatever has been sold, or selling whatever has been bought is not allowed except through the same brokerage company.

Conclusion

These new regulations come at a time when the market is in great need for new tools and mechanisms to increase its activity and grant companies modernized tools. Having said that, it is important to broaden awareness of these new dealings so to avoid their dangers.   [1] EFSA Board of Directors’ Decision No. 67/2012 amending the mechanism of Intra-Day Trading, Egyptian Gazette, Issue No. 262 (cont.), 20 November 2012.