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Trading System  

The Egyptian Exchange has various trading systems to meet the needs of the majority of investors in the market.
The following is a simplified description of the set of systems used:

Main System:

X-Stream Trading System is the main trading platform used in the main market and the SMEs market to register investor orders to sell, buy and execute transactions.

Sub-systems:

- Registering the investors (Coding System), a system used to distinguish each of the investors dealing in the market with a code that he/she uses for trading.
- Omnibus Accounts System, it is a system where orders of a group of investors are executed in the name of a compound account and are reallocated after the trading session directly at the average executed prices.
- Block Trades System, a system designed to execute transactions of large size to neutralize their impact on the security’s price in the market.
- Surveillance System, which is one of the mechanisms used in the Egyptian Exchange, to verify that the executed transactions are in accordance with the laws, regulations and procedures stipulated to protect investors.
- Operations System (OPR), which requires certain conditions and criteria to be executed.
- Disclosure System, to announce the important news and data related to the traded securities.
- OTC Trading System, where unlisted companies are traded.

How transactions are executed at EGX:

  • Before investors can trade listed or un-listed securities (OTC), each investor must have a trading account with one of the licensed brokerage firms by the Financial Regulatory Authority (FRA) and the membership department at EGX.
  • All investors must open accounts with custodians, to ensure that investors’ accounts have the volume offered in case of selling and to transfer them to the buyer.
  • Members must register their customers’ orders immediately after receiving them. Registering includes the order details: name of the security, client account number, and quantity and time of receiving the order.
  • Brokerages must ensure that customers’ have sufficient balance in case of a selling order; they must also ensure that the necessary funds at the buyer before the execution of the trade.
  • Trading starts with an order given by a client to the brokerage firm to buy or sell a number of shares of a given listed company at a specified price.
  • This order will be queued on EGX electronic trading system either through a broker in EGX trading floor or remote trading and member firms’ premises. The order is then sent through the trading system to EGX central computers and an order confirmation is immediately routed back to the member firm.
 
The Cycle of Executed Transactions
     
Client want to buy or sell a stock or bond
     
Client Contacts the brokerage firm he/she deals with
     
Specify the order, price, quantity and type of security to be purchased or sold
     
The brokerage firm contacts their floor broker at time T
     
Order is processed on the trading system at time T
     
Misr For Clearing, Depository And Central Registry handles the Clearing, Settlement of the shares or bonds at Time T, T+1,T+2
     
Brokerage firm receives the transcripts of executed transactions that are settled
     
Brokerage firm gives the client’s bookkeeper transaction transcripts

The factors used to determine the queuing and matching priority of orders are as follows:

  • Price, the order with the best price has the priority
  • Time, considering a single price level, time of entry of an order governs its priority on a First in First out (FIFO) basis.
  • Special Terms’ orders, the normal order that has no restrictions will be given priority over orders with greater restrictions.
  • Cross, the lowest priority is given for matching an order of the same buyer and seller broker.

Brokerages enter client orders on the trading system

Broker enters client’s orders on the trading system where the security to be purchase or sold is mentioned. The data related to the price (according to the security price limits, quantity, client’s code, custodian, and any other specification for the client. This transaction is processed directly on the trading system or through electronic systems at the member firms’ back offices. The client also can register his orders on the trading system that some member firm provides to its clients. Once orders’ data is submitted, it is checked for validation to be ready for execution.

To view Order Confirmation Chart click here

 Discovery Session Rules:

The purpose of the Discovery session is to determine a new opening price for the securities - not necessarily the closing price of the last trading session. Its aim it that the new price reflects the events related to the price of the security in the market since the end of the last trading session and until the beginning of the new trading session, whether those events are positive or negative. Also, the Discovery session entails the execution of the largest possible volume of trading in the light of the buy and sell orders entered at the beginning of the trading session. This means that the opening price of the trading session is not necessarily the closing price of the previous day, and the new opening price is determined through orders entered for the security.

Price Limits and Temporary Trading Halt:

The Egyptian Exchange (EGX) has set price limits (ceiling/floor) of 10% during the trading session. The security is halted for 15 minutes if it exceeded the 5%, which is announced in the market to provide investors with time to evaluate their investment decisions. The price limit is 5% for the SMEs market.