Mohamed Omran, chairperson of the Egyptian Exchange (EGX), said the EGX is waiting to receive requests from the parties related to investment funds to register the funds’ certificates in the EGX, so as to take the required steps to create the substantive and procedural infrastructure needed for trading these documents in coordination with the Egyptian Financial Supervisory Authority (EFSA).
Omran told Daily News Egypt that registering the funds’ certificates allows investors to trade them flexibly rather than waiting each week for Sunday to submit requests for the investment funds’ managers to purchase or retrieve investment certificates.
He added that the trading of investment certificates in the EGX would require either providing an adequate trading system or amending the prospectus regulations. Hence, the EGX wants to make sure that the parties related to investment funds want to register their certificates.
Omran pointed out that the EGX has decided to register and trade the certificates on condition that it receives prior requests from related parties. The EGX has previously experienced similar conditions as it had made regulatory decisions or adjustments in registration rules to provide new benefits for companies, investors, or the government; however, these parties have not responded positively.
For example, the EGX made adjustments in the registration rules in February 2014, allowing the government to establish companies through the IPO system to finance national projects in the agriculture and infrastructure sectors, but the government did not establish any similar companies for more than two and a half years.
Omran noted that the registration of investment funds’ certificates would be non-mandatory, so that it fits the needs of the institution which launched the funds and the investors.
The asset managers told Daily News Egypt that the registration of investment funds’ certificates in the stock market, rather than banks, would lead to a radical change in the regulations of the funds stipulated in the executive regulations of the Capital Market Law and the prospectus, as well as amending the funds’ working system.
They added that the registering of the fund’s certificates in the EGX will create market and inventory rates of the same certificate. The market rate of certificates will be determined by the sale and purchase offers, while the inventory rate depends on calculating the value of the fund’s assets.
The asset managers further added that the brokerages will participate in the implementation of purchase and sale orders in the EGX. In addition, the certificates will be mostly registered by the companies that hold a register trustee licence, just as in the case of the stocks instead of the banks. It may lead to amending the articles of registering the fund’s certificates in the Capital Market Law.