The Egyptian Exchange

The Egyptian Exchange (EGX)

The financial infrastructure in Egypt is among the oldest market systems in the Middle East. The equity

market has existed since the 19th century, when early cousins of what we now call futures contracts

were traded for raw materials and resources such as cotton and seed (egx.com). More recently, a single

market exists; The Egyptian Exchange (EGX) comprises an exchange in Alexandria where commodities

contracts are traded, and a floor in Cairo where debt and equity are traded (egx.com).

In fact, Egypt's EGX was the very first stock Middle East / North African (MENA) exchange to be invited

to the World Federation of Exchanges (egx.com). The benefit bestowed by decades/centuries of

financial trading activity is evident in the well-developed, regulated markets of Egypt.

The fact that markets have existed and operated in Egypt since the late nineteenth century would seem

to indicate a level of sophistication and stability to the EGX; it stands to reason that a system with

infrastructure that has existed for long durations has a clear advantage over younger systems in terms of

efficient trading.

"To regulate and supervise non-banking financial markets to maintain their integrity, stability, and efficiency; to protect market participants; and to develop it, thus facilitating access to finance." (EFSA.gov.eg)

It seems clear that a structure for regulation exists in Egypt, but we believe a regulatory body is only as effective as the government and public sector that it exists within. Unfortunately, a closer look at the public sector in Egypt brings distressing information to light.

It should be noted that this high level of corruption seems to be symptomatic in the entire region, however, and not unique to Egypt. Of the nations that border Egypt, only Israel scores as less corrupt than Egypt, and from this information we can draw the conclusion that the MENA region nations are at greater risk in general compared to domestic markets.