In line with the imminent end of the listed companies fulfillment of NILEX listing rules which permits the trading of the company’s shares, EGX management – after a series of successful mock sessions with more than 2,300 transactions in which all the listed brokers have participated- will commence the trading in the small and mid cap companies market starting Thursday 3rd of June. This is a step to allow the companies listed on NILEX to complete the offering of 10% of its shares in accordance with NILEX listing rules. In addition EGX asked the companies listed on NILEX to submit its disclosure reports to commence trading of its stocks according to the rules organizing the capital markets. The disclosure report should include the company’s basic information, its area of activity, current investments, board members and their shares in addition to the financial situation of the company. Moreover, the Egyptian Exchange will publish the disclosure reports on the trading screens to allow all the investors to know the companies’ financial status.
Trading on NILEX will allow the local and foreign investor for the first time in the MENA region to diversify their portfolio’s to incorporate shares in small and medium companies.
The Chairman of EGX, Maged Shawky, announced that the trading session will take place daily from 11:00 a.m. to 12:00 p.m., and will follow an auction system style like the discovery session that is applied in the main market. In which the investors can enter their bid and ask offers any time during the last ten minutes in the session, and the transaction will be completed based on the price that ensures the highest volume traded. If more than one price matched the criteria, some other criteria is taken to choose form among the prices. The price which ensures that the least amount will be left unexecuted is to be chosen. If two prices are equated, in this case the average of the two prices is to be chosen. After the end of the session the orders that match the price are executed (from the orders given during the session). This criterion has been chosen due to the small size of these companies, as the auction system provides a better mechanism for trading and pricing these companies.
Meanwhile, Dr. Mohamed Omran, EGX Vice President, announced that trading on any company in NILEX, only during the first trading session will take place without any price limits and until the first trade takes place on any company. There after a 20% price limit will be implemented on the following sessions. Dr. Omran added that any investor can put bid and ask orders through the current brokerage firms exactly like the main market’s system.
Not to mention that the companies listed on NILEX are listed companies subject to the same listing and disclosure rules imposed on the main market companies. NILEX witnessed the first listing in mid 2008, and since then several local and foreign funds showed interest to invest in the promising companies listed on NILEX which shows strong expected demand on the inception of trading.
NILEX has been launched – the first of its kind in the MENA region- after the study of several successful foreign examples as a step to provide support for promising SMEs to achieve the required financing for growth and expansion to raise its competitive abilities and provide more employment opportunities.
Worth mentioning, that despite the global financial crisis, NILEX was able to attract 10 listings from several sectors, Industrial, Information Technology, Retail, Mining; in addition to Agriculture, Chemicals and Medical Industry.