In an effort to maintain the stability and security of transactions conducted on the Egyptian Stock Exchange (the “EGX”), the Financial Regulatory Authority (the “FRA”) has approved the EGX’s proposal to reverse transactions that may have violated trading rules.
The EGX now has the power to request securities brokers to reverse transactions via requiring the seller to buy back the shares from the buyer. In doing so, the EGX will assess how to address the impact of such mechanism on the calculation of the shares’ closing price.
The goal of such mechanism is to adopt and apply a principle of gradualism in cracking down violating trades without resorting to measures that may harm market stability. Furthermore, this mechanism greatly contributes to protecting stock trading from manipulation, which may be carried out by a particular investor or brokerage company through its clients.
In addition to the above, it has been disclosed that the EGX has further obtained the FRA’s approval on various measures relating to trading violations. It is unclear at this stage what said measures entail.
Market Reaction
Mr. Yasser ElMasry, Managing Director at the Arab African International Securities Brokerage, indicated that the new measure provides a strong message of reassurance to all market players regarding the use of control mechanisms on the market.
