Is the party ending? Parliament has caught on to GDRs as a way of getting FX: House Economics Committee chairman Ali Moselhy, former head of Egypt Post and one-time minister of social solidarity, condemned yesterday the use of GDR trades to obtain FX abroad. Moselhy wants EGX to start a policy review to close any loopholes that would allow the bourse to be used to funnel FX out of the country. Moselhy is calling for closed-door hearings into the matter even as he admits that GDR programs are not illegal, emphatically telling Al Mal that the practice must stop. While domestic investors have been forced since last year to settle their trades in global depositary receipts in EGP, foreign investors can buy shares in EGP on the EGX, convert to GDRs and liquidate their positions in USD to receive their funds abroad, a practice we noted back in May.

On a related note, EFSA has issued regulations concerning the sale of Egyptian Depository Receipts (EDRs) (think GDR but in reverse). FX earned from the sale of stocks outside of Egypt converted from EDRs must now be deposited at a Central Bank of Egypt-supervised bank.