Egypt's EGX approves new mechanism to calculate closing prices of stocks

Egypt - The board of directors of the Egyptian Exchange (EGX) has approved new amendments on the trading system regarding to calculating the closing prices of stocks, which will be come into effect by early September 2021, the EGX announced in a statement.

As per the new methodology, the closing prices of shares will be based on a moving-volume weighted average price (Moving VWAP) for a 30-minute period, instead of the current methodology that depends on the traded volume-driven weighted average price throughout a daily trading session, the EGX highlighted.

The new mechanism will also include a pre-close auction to determine the closing prices of securities 30 minutes before the end of a trading session.

The EGX’s board will set a date for a pre-close auction next week, upon which it will introduce the trade-at-close session which allows traders to transfer ownerships before 2:30 pm in case the pre-close auction resulted in new closing prices.

Traders will be allowed to transfer ownerships at the last Moving VWAP during the trade-at-close in case the pre-close auction has not resulted in new closing prices.

The new amendments also include that the limit on intraday share price moves has been set at 20% for the main market and 10% for the small- and mid-cap market.

These amendments come in line with the latest methods used by most of the developed and emerging stock markets in determining closing prices of stocks.

It is worth noting that the investment institutions have called for developing the EGX's mechanism for calculating closing prices of shares, in order to boost the institutional investments that follow-up the performance of Index Trackers.