By Islam Serour The Egyptian Financial Supervisory Authority (EFSA) announced the approval of the new regulations pertaining to the pre-trading session mechanism for quoting stocks' guide prices. The EFSA has yet to specify when the mechanism would come in effect. Chairman of the EFSA, Dr Ashraf El-Sharqawi, told the Middle East News Agency that the pre-trading session mechanism would be implemented as soon as the required programmes and software infrastructure are set up. According to the EFSA's press release, the pre-trading session mechanism aims to modify the current mechanism of the closing price in order to define the actual patterns of supply and demand more realistically, based on the biddings of traders prior to the actual trading session. The revival of the pre-marketing session was suggested by the board of the Egyptian Stock Exchange (ESE), which was cancelled as a precautionary measure after the re-opening of ESE post the suspension the followed the 25 January events. Dr Mohamed Omran, Chairman of ESE, stated that ESE's Board of Directors amended the regulations of quoting the closing guide price, and reviewed the criteria for the pre-trading session. The EFSA Chairman requested the ESE board amend the trading system in preparation for re-implementation the pre-trading session, which would open at 9:45 am and close at 10:30 am, the time when actual trading commences. The new regulations for the pre-trading prices stipulate that in order for the guide price to change at least 25 percent of brokerage firms dealing on the concerned security command for the ask price and another 25 percent for the bid price, with a minimum of 5 companies for each of the ask and bid prices. Execution takes place in accordance with early orders recording. Nevertheless, executable bids and offers should not exceed the required volume to alter the closing price from that of the closing price determinants. When the official trading session begins, executable volumes are transferred as executed. Unexecuted orders are transferred to the trading session. According to the new regulations, price limits will determine rises and drops during the pre-trading session of the last closing price upon the authority's approval. Price limits remain within the enforced regulation during the trading session. The EFSA's announcement was met by positive reactions from the business and financial community, hailed as a step in the right direction towards the enforcement of better regulatory measures.
