* Brokerages can trade foreign stocks for non-Egyptian
* Local investors however can buy overseas-listed GDRs
* Brokerages welcome decision, should boost revenues
CAIRO, March 5 Egypt's financial regulator, as
part of a broader effort to invigorate the country's financial
markets, has lifted a ban on brokerage firms and fund managers
trading shares listed overseas.
The markets' watchdog introduced the ban in June 2012,
saying such deals exposed investors to risks it could not
monitor. Traders at the time said the restriction could be aimed
at limiting transfers of hard currency abroad.
Egypt's foreign reserves have shrunk significantly since the
2011 uprising that swept long-time ruler Hosni Mubarak from
power. Reserves stood at $17.307 billion in February, down from
around $35 billion before 2011.
Much of the activity in Egypt's capital markets dried up
during the political instability that followed the toppling of
Mubarak although the stock market has since rebounded.
The new rules, effective immediately, allow brokerages and
fund managers in Egypt to trade foreign shares on behalf of
non-Egyptian investors who do not reside in the country and who
use financing from abroad, said Sherif Samy, chairman of the
Egyptian Financial Supervisory Authority (EFSA).
Egyptian firms remain banned from trading stocks that are
not listed in Egypt on behalf of local investors or on their own
accounts, Samy added in a telephone conversation with Reuters on
The rules do however allow brokerages to trade global
depository receipts (GDRs) listed on stock exchanges abroad on
behalf of local investors.
The change is aimed at allowing Egyptian financial
institutions to serve foreign clients by executing transactions
in markets in the region such as Saudi Arabia, the United Arab
Emirates, Jordan and Bahrain, Samy said.
"Companies wishing to trade foreign shares that are not
listed on Egypt's bourse will commit to obtaining prior approval
from (EFSA)," Samy said.
Brokerage firms welcomed the decision, which should enable
them to boost revenues.
"This decision is 100 percent right," said Mohamed Ebeid,
co-head of securities brokerage at EFG Hermes, one of the Middle
East's largest investment banks.
"The decision will return Egyptian brokerage firms to work
within the whole region once again."
In an effort to boost trading and attract more investment,
EFSA introduced new regulations last month for companies listed
on the Cairo stock exchange.
Egypt's benchmark index lost as much as half of its
value in the months that followed Mubarak's toppling but
activity on Cairo's stock exchange bounced back after the army
deposed Islamist President Mohamed Mursi.
It reached a 5-1/2 year high last month at over 8,100
points, around 12 percent above its level on the eve of the
(Reporting by Ehab Farouk and Nadia El-Gowely; Writing by
Shadia Nasralla; Editing by Susan Fenton)