Egypt’s Financial Regulatory Authority (FRA) and representatives from investment banks operating in the Egyptian market have met to discuss ways of stimulating trade on debt instruments.
The meeting was attended by FRA Chairperson Mohamed Omran, his deputy Islam Azzam, officials from the market operations finance sector at the authority, and representatives of a number of investment banks operating in the Egyptian capital market.
Omran said that the Egyptian Exchange (EGX) has enjoyed a competitive investment environment between global and regional financial markets since the middle of last year.
This makes it the least expensive market in exchange for services for trading operations that the market regulators charge compared to the surrounding markets. It comes after a reduction of more than 40% of the cost of transactions made on securities.
In order to increase the incentive to deal in debt instruments, the issued decisions package granted further reductions of up to 50%. These reductions have been applied on the cost of services in exchange for trading operations on bonds, financing instruments and other debt instruments listed on the EGX. They are in exchange for services for trading on shares after adjusting them.
At the meeting, Azzam undertook a presentation on the transaction costs when trading bonds, whether government bonds or corporate bonds, which affect the final price of the security.
He stressed the need to develop the EGX’s corporate bond market after the volume of bond issuances in the primary market since 2017 amounted to about EGP 1,397.2bn (about $90.1bn). He also advised promoters and guarantors of bond underwriting to change their marketing policy towards their bond issuing clients through allocating part of debt instrument issues to small investors.
The meeting concluded with the attendees agreeing to present a working paper to Azzam before the beginning of March that will encourage the circulation of debt instruments among small investors and in the development of the secondary market.