New trading platform set to 'restore confidence' in Egypt's bourse

Sherine El Madany
5 Min Read

CAIRO: The Egyptian bourse will ring its opening bell next Thursday on a new trading platform built by Nasdaq OMX, making it among the region’s first three exchanges to make the switch.

The Egyptian Stock Exchange announced this week that it will switch to X-Stream – a high performance trading system supplied by the world’s largest exchange company Nasdaq OMX – as of Nov. 27.

“Based on the vision to become a financial hub in the region by developing tools offered on the market, the Egyptian Stock Exchange saw a need to switch to a new trading platform, the stock exchange said in a press statement.

X-Stream provides reduced cost and ease of operation through a fully integrated trading platform – equities, debt, futures, options, swaps and derivatives – on a single platform.

“The main advantage of this new trading system is that it supports derivatives, futures, and options, said Hatem Shafie, assistant to chairman of investment and financial affairs at the stock exchange.

Furthermore, the new multilateral trading venue offers trading across structured products, small and mid-sized enterprises and exchange-traded funds (ETFs), which will place the Egyptian market ahead of other regional markets, the stock exchange said.

Regionally, Nasdaq OMX is already operational in Israel and was reportedly launched in Dubai, UAE last Tuesday. According to the Egyptian Stock Exchange, X-Stream is used in 15 countries worldwide including China, Switzerland and Indonesia.

Launched at a time when appetite for trading on the Egyptian bourse has slumped in the second half of the year – as investors are concerned by the worst global credit crisis since the Great Depression – the new trading platform could reduce risk and invite some confidence to the market.

Investment bank Beltone Financial said the index has lost almost 65 percent of its value this year.

“The Nasdaq platform will diminish risk [to some extent] because it projects a more realistic image of market performance, said Hany Saad, deputy managing director at Delta Rasmala Securities.

He explained that the trading platform currently used on the Egyptian bourse moves up or down based mainly on performance of blue-chips such as Orascom Construction Industries (OCI), Orascom Telecom (OT) and Commercial International Bank (CIB).

“For example, if the entire market is up but OCI is down, then the index gets pulled down because OCI holds a heavy weight of 27 percent on the index, he said. “But Nasdaq will not get dragged in that case because it does not only reflect performance of stocks such as OCI. . It projects buy/sell activities in all stocks. This will reduce risk and restore some confidence back into the market.

“These days, the CASE 30 index has plummeted because OCI – the biggest stock in the index – is down even though other stocks are up. But with Nasdaq, the index will not only be OCI, OT and CIB. Therefore, the market will not sink steeply if these stocks are down, he added.

The Nasdaq venue will also beef up trading turnover on the bourse by up to five-times its current capacity. “This is another reason behind launching the new platform, Saad said.

“The new system is designed to increase interest in the Egyptian Stock Exchange, he added.

The stock exchange said that it has so far embarked on training some 1,000 stock brokers on means of using X-Stream in order to ensure the new platform is used efficiently and is tailor-made to Egyptian market needs.

Investment bank EFG-Hermes sponsored the first Nasdaq OMX Middle East Investor Conference in Dubai on Nov. 20. The event was meant to provide investors with the opportunity to learn more about the strategies of more than 30 listed companies, the firm said in a statement.

EFG-Hermes CEO, Hassan Heikal said the conference is an “excellent way to maintain a dialogue between investors and senior executives of listed companies, particularly when markets are sluggish.

“Hearing their business forecasts firsthand will give the investment community invaluable insight into the future of the markets. The participating companies will also benefit from the exposure to Gulf markets, he added.

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