4 Nov 2019
EGYPT: Stock Market Fees Slashed to Boost Investment
The Egyptian stock exchange has cut transaction and settlement fees, as well as reducing premiums and expanding coverage for listed companies’ compulsory bankruptcy insurance.
Egypt’s financial regulator, the Financial Regulatory Authority (FRA), announced the changes on 13 October. The FRA approved cutting trading fees from 0.00625% to 0.005% of the transaction value; clearing and settlement fees have been dropped from 0.0125% to 0.010%; and stock market commissions are now just 0.010%, reduced from 0.012%.
The fee charged for the Egyptian Investor Protection Fund (an insurance requirement against bankruptcy of listed firms) has also been trimmed from 0.010% to 0.0050%. The Egyptian cabinet has also approved a plan to extend the fund’s coverage to insure shareholders against bankruptcy of listed companies, up to EGP500,000 (US$31,000). Trading service fees on bonds listed on the exchange will also be reduced to half the trading service fees of shares, following the adjustment being introduced.
The exchange comprises two bourses, Cairo and Alexandria, both governed by the same board of directors and sharing the same trading, clearing and settlement systems.
The country is eager to boost investors’ interest in its capital markets, particularly, as the Egyptian government plans to sell minority stakes in 23 state-owned companies on the stock exchange as part of its plan to raise EGP80 billion (US$4.93 billion). It is also following other regional exchanges that have been cutting their transaction charges. Most recently, the Abu Dhabi Securities Exchange cut its fees by as much as 90%.
Foreign investors are important players on Egypt’s capital market. Since the beginning of the year, Egyptian investors represent 66% of the value traded in listed stocks after excluding deals; investors from other Arab countries captured 9%; while other foreign investors accounted for 25%.
The proposed cuts have now been passed to the Egyptian cabinet for approval.