CAIRO: Egypt plans to introduce a trading system enabling foreign investors to place buy or sell orders for shares on the Cairo exchange more directly to improve liquidity and efficiency, a senior official said.
Investors abroad will still need to operate through a licensed broker in Egypt but the new Financial Information eXchange (FIX) system will automate the process and mean the Egyptian broker will not see details, such as the size of the order, until the transaction is completed.
Egypt is one of the most active bourses in the region, but analysts say liquidity could be boosted by steps like improving corporate disclosure, encouraging more initial public offerings and de-listing more firms not actively traded.
The FIX system was expected to be launched by mid-year with a link to London before connecting to other centers such as in the Gulf, said Maher Asham, CEO of Egypt for Information Dissemination (EGID), partly owned by the Egyptian Exchange.
"This is something we are about to release. We are testing it with a few market players," he told Reuters, adding that it was part of efforts to streamline trading and improve liquidity.
Under the new setup, an investor abroad in a center with the FIX connection will be able to place an order straight through the automated system of a licensed Egyptian brokerage without requiring a broker in Cairo to punch it in.
FIX is an international system for trade-related messages. Introducing the system would mean an Egyptian broker would not have privileged information about the transaction such as size or price before it was executed.
About 15 percent of trade on the bourse comes from investors in the United States and Britain, analysts say. Egypt has been attracting interest from foreign fund managers eyeing Egypt’s solid growth while much of the rest of the world languishes.
Egypt’s economy expanded at more than 7 percent a year before the world downturn, but even during the crisis managed to maintain growth of nearly 5 percent.
Despite this interest, analysts say the financial crisis and some concerns about the direction of economic policy depressed foreign flows to the bourse in the past two years.
The cabinet took office in 2004 with a burst of economic liberalization steps like slashing taxes and cutting red tape, moves that foreign and local investors praised. But changes in tax rules on free zones in 2008 rattled some investors.