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Monday, 6 July 2020

EGX looking to change how closing share prices are calculated, says Farid

REGULATION WATCH- EGX looking to change how closing share prices are calculated, says Farid: The EGX plans to implement “soon” a mechanism proposed by the Financial Regulatory Authority’s stock exchange advisory committee that would see the EGX conduct auctions to determine the closing price of shares, EGX boss Mohamed Farid said last week, according to Hapi Journal. The mechanism would see the bourse conduct an auction towards the end of each trading day, and the price set by the auction would override the weighted average calculated from the latest session price, granted the auction meets a minimum participation requirement from brokerages.

Exchanges the world over fiddle with closing price mechanisms with running arguments over the arcana of what is the ‘best” methodology. Page 6 of this pdf provides a nice, succinct overview of last trade vs. closing auction vs. volume-weighted average. Saudi’s Tadawul uses a closing auction system, and real geeks will want to read this presentation (in English) from Banque de France (pdf).

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