Launching derivatives exchange by year end is possible, official

Sunday 12 August 2018 12:07 PM

Egyptian Stock Exchange
Egyptian Stock Exchange

By Sherif Omar:
The deputy chairman of Egypt’s Financial Regulatory Authority (FRA) Khaled Al-Nashar said that the first financial derivatives exchange in the local market will likely be launched by the year end, adding that only the listed securities will be traded.
In statements to Al Mal newspaper, Al-Nashar said that in collaboration with market participants, the authority is exploring all earlier experiences across the globe to reach the optimal format in terms of both the body, which is responsible for trading, and governing rules.
The existence of an organized market for traded securities would prompt FRA to rely on it to launch the first financial derivatives exchange, he stated, adding that commodity exchange and futures exchange are to be launched later.
It should be recalled that a derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset (like a security) or set of assets (like an index). Common underlying instruments include bonds, commodities, currencies, interest rates, market indexes and stocks.
Meanwhile, Al-Nashar said that FRA is examining the regulations of adopting and operationalizing the mechanism of borrowing securities with the purpose of selling (short selling) in preparation for being introduced before the year end.