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Market maker licence expected to be out this month - Daily News Egypt

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Market maker licence expected to be out this month

Beltone, Hermes, Shuaa, Arqaam are top nominees to begin

Informed sources told Daily News Egypt that it is expected to announce the issuance of the first licence of the market maker on shares listed on the Egyptian Exchange (EGX) in March.

The sources said that the EGX is still studying the mechanisms of implementing the market maker’s activity to issue regulatory decisions for it.

It is likely that Beltone will receive the first market maker’s activity licence for one of the leading shares to make the first transaction, given that the company has good experience in presenting this activity, and the only one in Egypt that provided it on the index fund.

Market maker Beltone, a subsidiary of Beltone Financial Holding, also provided market-making services to Orascom Construction Industries (OCI) and shares on NASDAQ Dubai since it obtained the licence in 2015.

The sources also suggested that Shuaa, Hermes, and Arqaam are among the first to provide market maker services on Egyptian stocks.

Sherif Heshmat, the CEO of Arqaam Capital, said that his company intends to apply for a licence to practice the activity of the market maker once it is activated in the Egyptian market, as part of the tools it intends to provide to its customers during the coming period.  This will also include short selling, which the company has recently received a licence for.

The market maker includes providing buying and selling prices simultaneously for any security in a way that contributes to enhancing liquidity, providing attractive prices and stimulating trading. The EGX aims at issuing the tool to enhance liquidity rates on listed stocks, attract a larger segment of investors to the Egyptian market, and raise the efficiency of the Egyptian money market in order to cope with the reform plans and restructuring of the national economy adopted by the Egyptian government.

The market maker activity also aims to find a continuous balance between supply and demand and reduce the gap between the bid and ask prices, and then the ability to liquidate securities easily, especially less active stocks, which reduces price fluctuations up and down and leads to a stable price of trading of listed stocks.

Mohamed Omran, chairperson of the Financial Regulatory Authority, had issued decision No. 1200 of 2018 to amend and add licencing controls to exercise the activity of the market maker for the companies stipulated in Article (27) of the Capital Market Law.

He said at that time, the decision stipulated allocating a cash amount of no less than EGP 10m for each fund to the circulating indicators, and allocating a cash amount no less than 20% of the average daily trading values of the security for which the market is made. It also stated that  this should not be less, in all cases, than EGP 250,000 per security listed on the EGX and EGP 100 per SMEs securities.

He added that the regulations obligated the company licenced to practice the market maker’s activity to separate the market maker’s activity from the company’s other activities, provided that the company maintains separate accounts and records for each of the market maker’s activity for ETFs or the market maker’s activity for securities.

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