FRA introduces amendments to establish hedge funds on EGX

CAIRO – 23 April 2024: The Financial Regulatory Authority (FRA) passed proposed amendments to the executive regulations of the Capital Market Law, to establish hedge funds on the Egyptian Exchange (EGX), FRA Chairman said.

 

The amendments aim to diversify investment tools, enhance competitiveness, and make the Egyptian market more attractive to investors, according to Farid. He added that hedge funds are known for their flexibility in terms of regulatory rules compared to other investment funds and that they are a higher-risk investment tool that aims to achieve high returns. Eligibility to invest in hedge funds typically requires a minimum level of wealth or annual income.

 

This was during an event organized by the London Stock Exchange Group (LSEG) in Cairo.

 

During the event, Farid highlighted the Authority's current focus on digitizing non-banking financial transactions. This strategic priority aligns with the Authority's efforts to develop the non-banking financial sector and promote financial, investment, and insurance inclusion. He emphasized the increasing demand for non-banking financial services in all markets and the potential for further growth due to ongoing technological advancements, which facilitate access to and acquisition of these services. 

 

He also mentioned the authority’s plans to introduce licenses for using "Robo-Advisory" mechanisms in portfolio and investment management. "Robo-Advisory" refers to an electronic system that acts as an automated or digital financial advisor, assisting investors in selecting suitable investments based on their risk preferences, Farid noted. The system recommends appropriate stocks or, in the absence of risk tolerance, suggests risk-free financial instruments such as treasury bills and bonds. 

 

The FRA chairman also underlined the significance of increasing securities offerings by public companies, emphasizing that such actions align with the government's management of financial assets and the private sector's strategic considerations. Highly efficient markets depend on the participation of numerous traders and investors, resulting in improved pricing efficiency, greater market depth, and increased transaction volume.

 

Farid also shed light on the investment opportunities voluntary carbon markets offer and the government's increasing interest. He added that engaging in the voluntary carbon market enables companies to align with international developments and gain access to European markets for their products.