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Al-Ahram Weekly 2 - 8 March 2000 Issue No. 471 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 2 - 8 March 2000 Issue No. 471
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Interview Features Focus Heritage Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Tidying up the securities market
By Gamal Essam El-Din
Economists, capital market officials and stock investors gathered this week at the People's Assembly's Economic Affairs Committee to discuss a new bill aimed at introducing new regulations for the central depositing and listing of financial securities on the stock market.
Addressing the committee's meeting on Sunday, Economy Minister Youssef Boutros Ghali explained that the 58-article bill is part of his ministry's ceaseless efforts to upgrade stock market performance to cope with changing international financial developments in world stock markets. "For the next few years, our aim is that the Egyptian stock market become the most open and attractive in the region, for overseas financial investments. To achieve this, we have introduced several regulatory modifications to upgrade the market's performance," Ghali said.
Elaborating on the modifications proposed, Ghali said that financial transactions on the Egyptian stock market have increased substantially in recent years. This, he added, has complicated matters in the depositing and listing of financial securities on the stock market as well as the conducting of clearance and settlement operations. "Egypt lacks legislation especially designed to regulate this growing field of business on the stock market in a more disciplined and transparent way," Ghali said.
The new bill purports to create a special company for the central depositing and listing of financial securities. It will also take charge of conducting the necessary and complementary functions as clearance and settlement operations on these securities. "This will greatly enhance stock market performance, putting it into strict order, since it will necessitate that trading of financial securities and shares on the stock market be conducted through this company. Stock investors will not be required anymore to process financial papers themselves in order to complete the exchange of ownership of financial securities. They will instead resort to the suggested company to automatically list the new deal in its computerised books. This will be a necessary step to legalise the ownership transaction and make it more transparent," said Ghali.
Abdel-Hamid Ibrahim, chairman of the Capital Market Authority (CMA), said that the proposed company will hold books in which names of owners of shares and financial securities will be centrally listed. This, he added, will put an end to the risks which currently riddle financial securities' trading on the stock market and reduce the costs which stock investors usually have to bear for the issuance and printing of financial securities.
The proposed Depositing and Central Listing Company (DCLC) will take the form of a non-profit joint-stock company and will be established by the CMA. Subscription to the company will be restricted to individuals and agencies directly involved in central depositing operations. This, Ibrahim said, will primarily include Egyptian banks and joint-stock companies whose shares are regularly traded on the stock market. "Each subscriber, however, will be prohibited from owning more than five per cent of the company's shares," Ibrahim said.
He also said that the bill stipulates that a fund be established to cover financial commitments and non-commercial risks which might face the company in concluding depositing and listing operations.
According to Ibrahim, the bill's preparation took two years and has drawn on similar legislation that governs the performance of some of the most prestigious stock markets in the world. "In the last few years, we have moved in more than one venue to introduce overall development and create a strong institutional framework for the stock market. The stock market financial securities trading sector was the last of these " Ibrahim said. "We began with the engineering aspect, which focused on automating the stock market. Then came the institutional framework, which provided extensive training to CMA's employees, stock investors and brokers.
