EGX 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 used systems set:

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 data (Coding System): a system used to distinguish the investors that dealing in the market with a code that they use for trading.
• Omnibus Accounts System, it is a system where orders of a group of investors are executed in a combined account and are reallocated after the trading session directly with the average executed prices.
• Large size Trades System: a system designed to execute large size transactions to neutralize their impact on the security’s price in the market.
• Trading System surveillance, 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.

Executing transactions at EGX

1. Before investors can trade listed or unlisted securities (OTC), each investor must have a trading account with one of the licensed brokerage firms by the Financial Regulatory Authority (FRA) and the membership department at EGX.
2. All investors must have an account with custody bank, to ensure that investors’ accounts have the volume offered in case of selling and to transfer them to the buyer.
3. Brokerage firms must register their customers’ orders immediately after receiving them. Registering includes the order details: name of the security, client account number, quantity and order receiving time.
4. Brokerage firms must ensure that customers’ have sufficient balance in case of a selling order, they must also ensure that the buyer have necessary funds before the execution of the trade.
5. Trading starts with an order given by a client to the brokerage firm to buy or sell a number of shares of a given listed company at a specified price.
6. This order will be registered on EGX electronic trading system either through brokerage firm representer or through screens in the brokerage companies (remote trading). The order is then sent through the trading system to EGX central computers and an order confirmation is immediately routed back to the firm representer.

The cycle of executed transactions

1. Client wants to buy or sell a stock or bond.
2. Client contacts the brokerage firm he deals with.
3. Specify the order, price, quantity and type of security to be purchased or sold.
4. The brokerage firm contacts their floor representer at time T.
5. Order is processed on the trading system at time T.
6. Misr for clearing, depository and central registry handles the clearing settlement of the shares or bonds at time T+0, T+1, T+2 & T+4.
7. Brokerage firm receives the transcripts of executed transactions that are settled.
8. Brokerage firm gives the client’s custodian the transaction transcripts.

The factors used to determine the execution priority and differentiation between orders:

• Price, the order with the best price has the priority.
• Time, considering a same 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.

Brokerages enter client orders on the trading system

Broker enters client’s orders on the trading system where the security to be purchase or sold is mentioned. The data related to the price according to the security price limits, quantity, client’s code, custodian, and any other specification for the client.

This transaction is processed directly on the trading system or through electronic systems at the member firms’ back offices. The client also can register his orders on the trading system that some member firm provides to its clients. Once orders’ data is submitted, it is checked for validation to be ready for execution.

Discovery Session Rules

The purpose of the Discovery session is to determine a new opening price for the securities – not necessarily the closing price of the last trading session. Its aim that the new price reflects the events related to the price of the security in the market since the end of the last trading session and until the beginning of the new trading session, whether those events are positive or negative.

Also, the Discovery session entails the execution of the largest possible volume of trading in the light of the buy and sell orders entered at the beginning of the trading session.

This means that the opening price of the trading session is not necessarily the closing price of the previous day, and the new opening price is determined through orders entered for the security.

Price Limits and Temporary Trading Halt

• The main market:

The price limits shall be within ±20% calculated from the previous closing price, and trading shall halt for 10 minutes if the closing price exceeds 10%.

• The Small and Medium enterprise (SME) market:

The price limits shall be ±10% calculated from the previous closing price and the trading shall halt for 10 min if the closing price exceeds 5%.

• For securities constituting the “D” list:

The price limit is ±5% calculated from the previous closing price, with no closing auction, the “D” list includes securities that do not meet the rules of registration and disclosure.