This is an overview of the Egyptian Exchange

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Managerial Finance
Dr. Mohamed Tarek
* Overview in Egyptian stock Market( Egyptian Exchange-EGX)
AAST Student: Mohamed Adel Taha
ID: 19221027
Master of Business Administration (MBA)
Group: 2st (4E) (Dokii)
Introduction about Stock exchange:
A stock exchange is a facility where stockbrokers and traders can buy and sell securities, such as shares of stock, bonds, and other financial instruments.
Stock exchanges may also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment
of income and dividends.
Egyptian Stock Market (EGX):
Exchanges are one of the main pillars of economies as they are a key source for financing corporation to advance their expansions. Thus, the Egyptian
Exchange (EGX) is committed to compliance with the process of national economic reform from its own perspective. It therefore works to increase the
level of supply by encouraging more companies to list, in addition to increasing the level of transparency by contact between listed companies and
investors. It is also important to increase the level of financial culture and understanding in order to attract more investors to enter the market where
they can see the market as a long-term incremental saving tool.
EGX Strategy:
1. Enhancing the legislative and regulatory infrastructure of the market
2. Developing the trading platform and upgrading the technological infrastructure
3. Reinforcing EGX role in enhancing economic and social welfare
4. Increasing promotional activities and awareness

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Some ofEGX Products & Services:
 Stocks: It is a financial security that gives the holder a share of the ownership of the company, depending on the percentage he holds. There
are 2 types of stocks; common stocks and preferred stocks. Ordinary or common shareholders have the right to share in the profits of the
company only after preferred shareholders have been paid their dividends. In case of the company’s bankruptcy, its ordinary shareholders will
receive a payout only after all other creditors, bondholders and preferred shareholders have been paid.
 Bonds: A bond is a debt instrument, whereby one party lends money to another party. The lender is called the buyer of the bond and the
borrower is called the seller or issuer of the bond. The buyers of bonds therefore lend money to the issuers. Government bonds are issued by
governments to finance public expenditure. Government bonds traded on EGX include treasury, housing and development bonds.
 Funds:Close-end mutual funds are created by gathering money from investors. However,unlike an open-end fund, close-end funds are traded
freely on an exchange such as EGX. These funds tend to behave as a common stock. After the fund’s inception, investors could only exchange
certificatesvia the stock exchange. This means that the total size of the closed-end fund does not change with investor activity. Thus, an investor
willing to sell or buy certificates of closed-end fund has to submit an order to the member firm or brokerage firm, similar to the procedure used
by the investor to purchase or sell shares.
 Structured product: Structured products were created to meet specific needs that cannot be met by the standardized financial instruments
available in the markets. Structured products can be used asan alternative to a direct investment, aspart of the assetallocation processto reduce
risk exposure of a portfolio, or to utilize the current market trend. A number of structured products, issued by severalinternational financial
institutions on the Exchange in-house designed index, EGX 30 Index, are listed and traded on various European Exchanges.
 Exchange Traded Funds (ETFs): ETFs are index funds that are listed and traded on stock exchanges like shares; they allow investors to gain
a broad exposure to entire stock markets of different countries and specific sectors with relative ease,on a real-time basis and at a lower cost

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than many other forms of investing. ETFs are basically a basket of securities that are traded on a stock exchange. They are structured as open-
ended mutual fund to offer low-cost exposure to the stock market. Unlike mutual funds, ETFs can be traded throughout the trading day. ETFs
are More Efficient and Economical, More Transparent, More Flexible, More Diversified and More Liquid.
 Services Provided by the Listing Division: Providing legal and technical advices to companies wishing to be listed in the stock exchange and
assisting these companies in all listing phases.
 Services Provided by the Deals Department (Over-the-Counter): Technical cooperation with member firms in order to meet legal
requirements to execute trades on unlisted securities.
EGX Activities:
 Listing: The Egyptian Exchange (EGX) provides a well-regulated and efficient market by keeping abreast with international standards, which
enables the listed companies to get the required finance and expand their businesses. Some of EGX Listing offers are to:
 A high performance trading platform conforming to international standards and up to date technology.
 A coherent regulatory framework in line with the best international practices.
 Cutting edge market surveillance to prevent manipulations.
 Market liquidity which facilitates the execution of transactions.
 A wide range of product mix
 A good number of blue chip issuers
The Listing Processin the stock exchange requires a series of procedures and is divided into four stages. The first is the company’s registration
in the FRA’s registry, which is a register to register Egyptian and foreign companies and entities wishing to register or register It listed its
securities on the Egyptian Stock Exchange, and includes the basic data for each a company with the Authority’s registry, such as: company
name - address - purpose - activities – structure ownership - Types of Securities Required to Offer - Major Shareholders – Board Management
and key managers - types of shares (preference - ordinary).

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The second is Preparing for registration and preparing the required documents and submitting them to the competent department the stock
exchange has a list of registration agents to help companies on how to finalize the listing procedures in the stock exchange, and in the event
the company prefers to submit the registration request through its authorized representative without the assistance of the registration agents
A specialist in listing affairs in the Egyptian Stock Exchange is ready to assist the company in this the stage and the following stages, as the
company or entity must within one month at most, the approval of the Authority for the registration shall terminate the entry or registration
and offering Its securities are listed on the Egyptian Stock Exchange, and this period may be extended with the approval of the Authority.
The Third is the company offers a percentage of its shares for trading on the stock exchange according to a disclosure report for the purpose
of the offering or a prospectus approved by the Authority, after its publication by specific means of publication, the process of implementing
an offering on the stock exchange begins through a management market operations.
Then comes the Fourth and final phase with the success of the offering, and the remaining registration conditions are fulfilled (The offering
percentage,the percentage of free-to-trade shares,and the number of shareholders) and the final registration is made the company's shares are
traded on one of the stock markets.
Where the Operations Committee determines the date of starting trading on the company's shares at Stock markets, as well as the opening
price and whether or not the price limits move a trading day to determine the closing price of the stock based on the forces of supply and
demand.
There are three types of Listing fees implemented as per Prime Minister Decree no. 2125 of the year 2018 and the EGX Board of Directors'
decrees (AnnualListing Fees - Administrative Services Fees - Financial Statements Publishing Fees)
The Listing Agent helps the issuing companies seeking to be listed on EGX for the first time or the companies already listed on the Main
Market in finalizing the listing procedures and fulfilling the ongoing listing requirements. The listing agent also ensures that all company’s
transactions are done in accordance with the listing rules, executive procedures as well as the clauses of the contract agreement and the
decisions issued by FRA and EGX.
The Listing Agent acts as a liaison between EGX management and the issuing company willing to list. His role extends to offering technical,
legal and financial consultancy to the company regarding the application of the listing and disclosure rules, assisting listed company’s investor
relation officers in complying with listing rules and avoiding violations of the listing and disclosure rules which result in financial penalties.

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 Trading: The trading systems and mechanisms are considered among the most important factors for the development of securities markets
globally, enhancing their effectiveness,which urged the Egyptian Exchange to develop its trading systems to:
1. Provide sophisticated trading mechanisms to ensure maximum transparency and fairness to all market participants.
2. Increase the capacity to attract more investments - whether domestic or foreign - that are always interested to enter sophisticated markets.
3. Meet the needs of market participants within the characteristics and mechanisms of trading.
4. Increase the ability to absorb as many investor orders as possible, thus increasing the number of transactions executed during the trading
session.
5. Facilitate the work of financial intermediaries in securities market.
TRADING SYSTEM : The Egyptian Exchange has various trading systems to meet the needs of the majority of investors in the market.
The following is a simplified description of the set of systems used:
Main System:
X-Stream Trading System is the main trading platform used in the main market and the SMEs market to register investor orders to sell, buy
and execute transactions.
Sub-systems:
- Registering the investors (Coding System), a system used to distinguish each of the investors dealing in the market with a code that he/she
uses for trading.
- Omnibus Accounts System, it is a system where orders of a group of investors are executed in the name of a compound account and are
reallocated after the trading session directly at the average executed prices.
- Block Trades System, a system designed to execute transactions of large size to neutralize their impact on the security’s price in the
market.
- Surveillance System, which is one of the mechanisms used in the Egyptian Exchange, to verify that the executed transactions are in
accordance with the laws, regulations and procedures stipulated to protect investors.
- Operations System (OPR),which requires certain conditions and criteria to be executed.
- Disclosure System, to announce the important news and data related to the traded securities.
- OTC Trading System, where unlisted companies are traded.

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The Cycle ofExecuted Transactions
The factors used to determine the queuing and matching priority of orders are as follows:
 Price,the order with the best price has the priority
 Time, considering a single price level, time of entry of an order governs its priority on a First in First out (FIFO) basis.
 Special Terms’ orders, the normal order that has no restrictions will be given priority over orders with greater restrictions.
 Cross, the lowest priority is given for matching an order of the same buyer and seller broker.
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Price Limits and Temporary Trading Halt:
The Egyptian Exchange (EGX) has set price limits (ceiling/floor) of 10% during the trading session. The security is halted for 10 minutes if
it exceeded the 5%, which is announced in the market to provide investors with time to evaluate their investment decisions. The price limit
is 5% for the SMEs market.
Client want to buy or sell a stock or bond
Client Contacts the brokerage firm he/she deals with
Specify the order, price, quantity and type of security to be
purchased or sold
The brokerage firm contacts their floor broker at time T
Order is processed on the trading system at time T
Misr For Clearing, Depository And Central Registry handles the
Clearing, Settlement of the shares or bonds at Time T, T+1,T+2
Brokerage firm receives the transcripts of executed transactions
that are settled
Brokerage firm gives the client’s bookkeeper transaction
transcripts

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Exchange Trading Fees are In terms of listed securities,the Exchange service fees are levied at 0.01% (EGP 10/ EGP 100 thousand) of
the value of each party of the transaction, with a maximum of EGP 5,000.
As for non-listed securities,the Exchange service fees are levied at 0.1% (EGP 1/ EGP 1000) of the value of each party of the
transaction, with a maximum of EGP 50,000.
As for Global Depository Receipts transactions,the Exchange service fees is 0.025% (EGP 25/ EGP 100 thousand) of the value of each
transaction and it is paid in USD.
As for the commission for transactions executed in USD are paid in the same currency
 Indices:
EGX 30 INDEX: previously named CASE 30 Index, is designed and calculated by EGX. EGX starteddisseminating its index on 2 February
2003 via data vendors, its publications, web site, newspapers etc. The start date of the index was on 4/1/1998 with a base value of 1000
points.
EGX 30 index value is calculated in local currency terms and denominated in US dollars since 1998. EGX started publishing its dollar
denominated index on 1st of March 2009.
EGX 30 index includes the top 30 companies in terms of liquidity and activity.
EGX 30 Index is weighted by market capitalization and adjusted by the free float. Adjusted Market capitalization of a listed company is the
number of its listed shares multiplied by the closing price of that company multiplied by the percent of freely floated shares.
For a company to be included in EGX 30 index, it must have at least 15% free float or if its adjusted market capitalization in not less than
the median of adjusted market capitalization for all traded companies during the review period, and its free float is compatible with the
Listing Rules. This ensures market participants that the index constituents truly represent actively traded companies and that the index is a
good and reputable barometer for the Egyptian market.

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EGX50 EWI INDEX: The Egyptian Exchange has developed and launched equally weighted index EGX50 EWI. The index includes top
50 companies in terms of liquidity and activity.
The index is designed to balance the impact of price changes among the constituents of the index as they will have a fixed weight of 2% at
each quarterly review.
EGX50 EWI developed in consistent with the international best practices.
EGX50 EWI avoids concentration on one industry and therefore has a good representation of various industries/sectors in the economy. The
starting date of the index is 2nd of July 2013 with a value of 1000 points.
EGX 70 EWI INDEX: The Egyptian Exchange has launched equally weighted index EGX70EWI on 02 February 2020.

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EGX is committed to the best international practice in managing its indices aiming to provide wider tools for investors to monitor market
performance. The Index includes top 70 companies in terms of Liquidity and activity after excluding the constituents of EGX30.
EGX70EWI avoids concentration on one industry therefore has a good representation of various industries/sectors in the economy. The
index calculation started on 2nd of January 2008 with value of 1000 points. Every company in the EGX70 EWI have a weight of 1.43% at
each quarterly review.
EGX100 EWI INDEX: The Egyptian Exchange has launched equally weighted index EGX100 EWI on 10 May 2020, in order to develop
and diversify the Egyptian market indices that aim at providing wider tools for investors to follow the market. EGX is committed to the
best international practice in managing its indices.
The Index tracks the performance of the top 100 companies in terms of Liquidity and activity which includes the constituents of EGX30
and the constituents of EGX70 EWI.
The index calculation started on 2nd of January 2006 with value of 1000 points. Every company in the EGX100 EWI have a weight of
1.00% at each quarterly review.

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SECTORAL INDICES:The Egyptian Exchange (EGX) has launched EGX Sectoral Indices on 2nd of January 2020.
This comes as part of the reclassification of EGX equity market sectors according to a new comprehensive framework aiming to develop
and raise the efficiency of the Egyptian capital market.
EGX is committed to the best international practice in managing its indices management, starting with the eligibility criteria for selecting
companies to join the index, the periodic index rebalance, the index calculation and the dissemination of indices data.
EGX has played a leading role among the regional stock marketsin launching and developing in-house a variety of different indices designed
to measure the performance of the market according to liquidity and to meet the needs of investors.
EGX started publishing EGX Sectoral Indices with a base date of 01 February 2019 and a base value of 1000 points.
The sectoral indices will allow investors to track the performance of the constituents in each sectoralindex.
The indices are weighted by the adjusted free float market capitalization, while capping the weight of any constituent to a maximum of 35%.

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NILE INDEX (Nilex Exchange) : The Egyptian Exchange (EGX) has launched Nile Index on 2 February 2014.
It comes within the Exchange strategic framework and its interest to increase the Nilex market liquidity as one of the promising markets in
the Egyptian market.
In 2011, The Egyptian Exchange changed the trading mechanisms of Nilex Exchange from auction trading to continuous trading system,
followed by increasing the number of trading hours from one hour to four hours at October 2013.
The Index is weighted by market capitalization and adjusted by free float. Nile Index avoids concentration on one industry and therefore has
a good representation of various industries/sectors in the economy.
The Egyptian Exchange started publishing Nile Index, which has a base date of 02/07/2012 and a base value of 1000 points.

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S&P/EGX ESG INDEX: The purpose of S&P/EGX ESG index is to raise the profile of those companies that perform well along the three
parameters of environmental, social and corporate governance responsibility when compared to their market peers.
Linking stock market performance to ESG is, perhaps, the most effective way to highlight the concept of corporate-level Environment,
Social and Governance responsibilities.
More and more indices are being used to create derivative products, exchange traded funds (ETFs), OTC products and structured products,
all of which provide liquidity and invest ability to specific market segments.
Investors, in turn, have access to an investable tool which matches their investment preferences.
Asinvestment in ESGproducts increases,it will become imperative for companies to delve into their business practicesandstrive to improve
them.
EGX 30 CAPPED INDEX: The Egyptian Exchange has launched the EGX30 Capped Index on February 3, 2019. The index is designed
to measure the performance of the most traded companies in accordance with the rules set for mutual funds, as is stated in Article 174 of the
executive regulations of the Capital Market Law (95) of 1992.
The law stipulates that “any fund shall not invest more than 15% in the securities of a single company, nor exceed 20% of the securities
issued by such company”.
EGX30 Capped Index sets a maximum percentage on the weight of the constituents that is determined by its adjusted market capitalization.
Constituents are capped quarterly so that the weight of each constituent will not exceed 15% of the total weight. This would minimize the
control of a limited number of constituents on the overall performance of the index.

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EGX 30 TRINDEX:The Egyptian Exchange (EGX) has launched “EGX 30 TR” Index on 22nd of August 2019 to measure the performance
of the market and to meet the needs of wide variety of investors.
The index is developed as per international best practices in the field of index industry.
EGX 30 TR includes top 30 companies in terms of liquidity and activity and weighted by the adjusted free floated market capitalization, the
index avoids concentration on one industry/sector and therefore has a good representation of various industries/sectors in the economy.
EGX started publishing EGX 30 TR with a base date of 01 February 2009 and a base value of 1000 points. EGX 30 TR measures the total
return on the underlying index constituents, combining both capital performance and reinvested income using declared dividends. The index
calculation depends on last price instead of the VWAP closing price.
The Egyptian Exchange started publishing the EGX30 Capped Index, which has a base date on 30 January 2003 and a base value of 1000
points. The index is designed to capture the performance of the most active 30 companies in terms of traded value and liquidity, while
capping the weight of any constituent to a maximum of 15%.
Mohamed Adel Taha
12/11/2020