As part of EGX continuous efforts in developing the Egyptian capital market system and its efforts to increase the activity and deepen the market and improve the trading rates in order to increase the attractiveness of regional and international investment to the Egyptian market and keep pace with the global developments in the field of capital markets. The Egyptian Financial Supervisory Authority approved the decision taken by EGX Board in its session held on 20/8/2017 to reduce the period of temporary suspension of trading on a security during the session as a result of the price change to 15 minutes instead of 30 minutes, EFSA also provided the flexibility for EGX management to increase or decrease this period between its minimum time which is 15 minutes and its maximum time which is 30 minutes according to market conditions.
For his part, Mr. Mohamed Farid revealed that EGX has studied the international experiences of a group of emerging and developed markets alike to find out the best international practices in this regard, which showed the following:
- The trading suspension time varies from one market to another and ranges from 2 minutes to 15 minutes.
- The suspension of trading mechanism varies from one market to another and does not depend only on the price change of the security, as there are markets that do not suspend trading unless the price exceeds the maximum limit for a specified period of time such as two minutes or more.
- There are also other mechanisms applied in some stock exchanges are based on the holding of a bidding session for a period of time ranging from one minute to three minutes to determine a new price of the stock during the trading session.
Farid added that perusing a long period of suspension is basically linked to the spread of information related to the security, and if there is new information on the security is one of the reasons for its price change. This has changed from the 90s due to the great progress in the means of communication and the transmission of information in periods of time much less than before, which is attributed to the decision of the EGX management to reduce the time of suspension to ensure continuity of transactions and the speed of implementation by investors.
Farid also pointed out that EGX continues to suspend trading in cases of price changes to ensure the stability of markets in case of the occurrence sudden or unexpected price changes.
In a related context, Mr. Mohsen Adel, Vice President of EGX, clarified that the decision to reduce the period of suspension of trading comes in the context of an integrated plan pursued by EGX management to develop the trading system in the Egyptian market, and this step will be followed by other steps to raise the efficiency of the market.
