FRA Approves Amendments to Capital Market Law to Establish Hedge Funds on EGX

The Financial Regulatory Authority (FRA) in Egypt has recently made significant strides in diversifying investment tools and enhancing competitiveness in the market. The FRA Chairman announced the passing of proposed amendments to the executive regulations of the Capital Market Law, paving the way for the establishment of hedge funds on the Egyptian Exchange (EGX).

Hedge funds are known for their flexibility in terms of regulatory rules and are considered a higher-risk investment tool aimed at achieving high returns. Eligibility to invest in hedge funds typically requires a minimum level of wealth or annual income. The introduction of hedge funds on the EGX is expected to make the Egyptian market more attractive to investors and further boost the economy.

This announcement was made during an event organized by the London Stock Exchange Group (LSEG) in Cairo, where the FRA Chairman, Farid, also highlighted the Authority’s focus on digitizing non-banking financial transactions. This strategic priority aligns with efforts to develop the non-banking financial sector and promote financial, investment, and insurance inclusion.

Farid also mentioned the authority’s plans to introduce licenses for using “Robo-Advisory” mechanisms in portfolio and investment management. This electronic system acts as an automated financial advisor, assisting investors in selecting suitable investments based on their risk preferences.

Furthermore, the FRA Chairman emphasized the importance of increasing securities offerings by public companies, as it aligns with the government’s management of financial assets and the private sector’s strategic considerations. This move is expected to improve pricing efficiency, market depth, and transaction volume in the market.

Lastly, Farid shed light on the investment opportunities in voluntary carbon markets and the government’s increasing interest in this area. Engaging in the voluntary carbon market enables companies to align with international developments and gain access to European markets for their products. Overall, these developments signal a positive outlook for the Egyptian financial market and its potential for growth.