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Sunday, 22 November 2020

The EGX has changed how it calculates closing share prices

REGULATION WATCH- The EGX has changed how it calculates closing share prices: Closing share prices on the EGX will be calculated according to the volume-weighted average, as long as this meets a minimum value based on the share’s trades over the preceding three months, according to an EGX statement (pdf). The conditional value is calculated by taking the share’s total value traded over the three months, dividing that figure by the number of trading days during that period, and multiplying the outcome by 0.5%. For the volume-weighted average price to be used, it must be more than the product of this equation or EGP 100k, whichever is higher. The new mechanism came into effect last Thursday but will be revised every three months, the bourse said.

Background: The EGX and Financial Regulatory Authority had planned to implement a mechanism that would see the bourse conduct auctions to determine the closing price of shares, EGX boss Mohamed Farid said earlier this year. The mechanism would have seen the price set by the auction override the weighted average calculated from the latest session price. The outcome of the auction would only be applied if a minimum participation requirement from brokerages was met. Officials have been discussing changes to how closing share prices are calculated since 2018. Other scenarios that were being considered included using the average price during the last hour of the trading day or only using the volume of trade.

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