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Egypt's financial watchdog: We have to regain the trust of investors

New chairman promises investigations and reforms in a drive to clean up EFSA's reputation

Bassem Abou Alabass, Wednesday 6 Apr 2011
Sharkawy
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Stamping out corruption in the Egyptian Financial Supervisory Authority will be a top priority, said new chairman Ashraf El-Sharkawy at the first EFSA press conference since his appointment in mid-February.

In a charged three-hour meeting with journalists at the EFSA’s Giza headquarters on Tuesday evening, El-Sharkawy pledged the Authority would focus on investigating suspect stock market deals, reforming disclosure rules for listed companies and carrying out the demands of its employees.

“We have to regain investors’ trust as a good supervisory authority,” admitted El-Sharkawy, who replaced Ziad Bahaa El-Din as EFSA chairman in the wake of the 25 January revolution.

El-Sharkawy said places on the EFSA’s board of directors would be reshuffled to avoid conflicts of interest, acknowledging previous clashes when officials with strong connections to brokerage firms were also in charge of inspecting their trading practices.

“The main functions of the EFSA are to protect investors, support them with any necessary information and hinder any manipulation or cheating processes in the market,” he told reporters.

The EFSA said it had not presented any corruption allegations against stock market investors to Egypt’s attorney-general, but has suspended some trading codes from being used on the stock market. “That is all we can do,” said El-Sharkawy.

The EFSA introduced a range of ‘emergency measures’ to guard against panic-trading and capital flight when the Egyptian stock market reopened on 23 March after seven weeks of suspension.  

Although full four-hour trading days resumed on Sunday, still in force are market freezes to limit fluctuations in share prices, a suspension of ‘discovery sessions’ normally used to decide prices for the day’s trade, and restrictions on buying and reselling the same shares in a single day.

“Price limits will be cancelled automatically [by the EFSA] when the stock market is stable, and we will reintroduce discovery sessions because their lack is affecting some shares,” said El-Sharkawy, adding that same-day deals will be last to be cancelled.

Challenged over delays in the launch of ‘Egypt – The Future’, an investment fund announced by the Bourse’s chairman on 23 March to attract first-time stock market investors, El-Sharkawy asked for patience. “Neither the EFSA nor Misr for Central Clearing [the fund’s owner] are causing the delay, it’s just legal procedures,” he said.

Asked by one reporter about the prospect of an ‘Islamic stock market’, El-Sharkawy was nonplussed.

“I can’t imagine that products have a religion – can I say an Islamic supermarket or a Christian car or a Jewish share?  Investment is not related to religion, but those who wish can be involved in financial ways approved by Sharia law, like deals in deeds or muniments.”

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