The Egyptian Exchange (EGX) and the Financial Regulatory Authority (FRA) are currently considering a regulatory update that could either eliminate or revise the lock-up period for substantial shareholders following an initial public offering (IPO), especially for government-owned companies.
Ahmed El Sheikh, Chairman of the EGX, explained in an interview with Al Borsa that the goal of this proposed change is to make it easier for government-backed companies to list on the EGX before fully exiting the market.
Under the current regulations, these major shareholders are required to freeze 51 percent of their shares for a minimum of two years from the first trading day, during which they cannot sell any of their holdings.
The hope is that by shortening or removing the lock-up period, companies will be more incentivized to go public, thereby facilitating smoother and more attractive privatization efforts.
The revision of the lock-up period is just one part of the EGX’s broader strategy to boost Egypt’s privatization program and attract more government-owned companies to the stock exchange.
In addition to regulatory changes, the EGX is set to launch three new indices in 2025: a Treasury Bills Index, a Sustainability and Sharia Index, and an Index for low-volatility stocks. These new instruments are aimed at diversifying investment options and enhancing market liquidity.
El Sheikh also highlighted plans to restructure sectoral indices, with an emphasis on sectors like banking, real estate, and financial services, which are seeing increased demand from asset managers looking to track sector-specific performance.
Gold Investment Funds and Improved Trading Systems
Another key initiative for the EGX is the introduction of a platform to facilitate the trading of gold investment funds.
This would provide a streamlined process for investors to register orders for subscription and redemption through the stock exchange.
At the end of 2024, the number of investors in gold funds reached 166,000, with total investments amounting to 1.6 billion Egyptian pounds.
Additionally, the EGX is collaborating with Nasdaq to implement a new trading system by the end of 2025.
This system will integrate a range of financial instruments, including derivatives and carbon certificates, and improve market supervision to enhance transparency and investor confidence.
As part of its ongoing reforms, the EGX, along with the General Authority for Investment, is proposing amendments to reduce the timeframes for capital increases and create a "Fast Track" process for companies already listed on the exchange.
Moreover, the EGX is considering proposals to ease the transition of partnerships and sole proprietorships into joint-stock companies, following requests from major entities interested in listing on the stock exchange.
The EGX is also focused on improving the secondary market for debt instruments. A new framework will allow individual investors to trade government debt securities directly through brokerage firms, facilitating easier access and improving liquidity in this market segment.
