|Al-Ahram Weekly Online
21 - 27 June 2001
|Published in Cairo by AL-AHRAM established in 1875||Current issue | Previous issue | Site map|
IT WAS ONLY in August 1998 when USAID became directly involved in the capital market. Since 1992, its had focused on energising the market by providing technical support to companies slated for privatisation whose stakes were being floated on the bourse.
Photo by: Barry Iverson
When growth in market transaction volume due to the divestment of state-owned entities presented a risk to the state's control system on market operations, USAID stepped in to help. It contracted Chemonics International to provide the capital market and its different institutions with the required technical assistance. Chemonics signed a three-year contract with USAID and the Egyptian Ministry of Economy, with an optional extra year that has just been approved, extending the $29-million project's duration till August 2002. The aim of the project managed by Chemonics is reflected in its name: Capital Market Development (CMD).
Tackling the legal and regulatory framework of market institutions first, CMD's most significant achievement was its help in developing the executive regulations of the capital market law and the central depository law. CMD offered the Capital Market Authority (CMA) and Misr for Settlement, Clearance and Depository (MSCD) -- a CMA-affiliated institution -- with the needed expertise to study the issues and make recommendations applicable to the Egyptian market, in addition to acquainting them with international standards governing transactions and their settlement.
Another area where the CMD project has been successful is reducing the number of unsettled transactions by establishing a settlement guarantee fund. In the last quarter of 1999, the number of unsettled transactions within the required three-day period after deals were finalised was 11,304, a figure that was brought down to 3,156 in the fourth quarter of 2000. It also helped in regulating bond trading and energising the fixed income securities market by assisting in issuing a bond dealer's decree.
In addition, Chemonics played a much-needed role in upgrading the skills of the staff working in different market institutions by arranging training courses and workshops and sending the CMA staff to receive training at the Securities and Exchange Commission institute in Washington.
USAID also provided assistance in the provision of information technology in the bourse, providing a $1 million grant for the procurement of hardware for the new stock exchange trading floor.
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