The EGX has grouped stocks into four categories based on index placement,a move that would tie what trading mechanisms are allowed for different trading volumes, a bourse statement (pdf) showed. The new division of stocks, which was approved by the Financial Regulatory Authority last Wednesday, will go into effect on Sunday, 25 February.

The categories are:

  • The most active market, which includes EGX100-listed stocks and index funds;
  • the moderately-active market, which includes non-EGX100-listed stocks;
  • the inactive market, which includes stocks belonging to the EGX’ D-list of non-compliance, companies under-liquidation, and companies with high insolvency-risks;
  • and the SMEs market, which is subdivided into Tamayuz-listed and Nile-listed stocks.

Settlement, buying on margin, and short-selling: T+0 (same-day) settlement, T+1 (next-day) settlement and buying on margin are only permitted for stocks in the active, moderately-active, and Tamayuz markets. Investors can also use stocks in these markets as collateral for buying on margin, utilizing 100% of their value if they are in the active market and 80% if they are in the moderately-active or Tamayuz markets. As for short-selling, it’s only permitted for EGX30-listed stocks and EGX-indexed ETFs.

When does the EGX break the circuit? A price move of +/-10% during a single session should trigger a temporary trading halt on stocks in the active and moderately active markets. The same stocks are also subject to an overall daily trading limit (limit up-limit down or LULD) of +/-20%. Meanwhile, trading is temporarily halted on Nile-listed and Tamayuz stocks when they see a +/-5% price move during a single session and they are limited to an overall daily price move of +/-10%. Stocks in the inactive market aren’t subject to temporary trading halts, but they have are limited to a daily price move of +/-5%.

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