CAIRO: The Egyptian Financial Services Authority (EFSA), the country’s newest regulatory body, has not yet had the chance to define itself. And it seems that the exact character of the EFSA will remain difficult to pin down.
Chairman Ziad Bahaa Eldin was interviewed Tuesday by Richard Banks, Middle East director for Euromoney, during a panel titled “The EFSA – can one size fit all?
By the panel’s conclusion the answer remained unclear, as did the role of the EFSA itself. What was apparent was Bahaa Eldin’s determination to deemphasize the significance of the EFSA as a departure from previous regulatory bodies.
Egypt created the new regulatory authority in June to oversee all non-banking financial markets as part of a long term process to reform and develop the nation’s financial sector. Various oversight committees were brought under a single umbrella organization, overseeing the capital market, the insurance market, mortgage finance and similar non-banking activities.
When asked by Banks about whether the EFSA would have “more teeth than its predecessors, he responded in the negative. When asked how the EFSA might interface with other regulatory institutions cropping up in the wake of the financial crisis, Bahaa Eldin answered that he did not see such regulatory measures occurring, citing instead the “soft laws governing international finance.
“Most international organizations set standards which can be followed or not. However, those that choose not to follow accepted standards soon find life difficult, he said.
When Banks asked jokingly whether the EFSA had yet sent anyone to jail for breaking regulations, Bahaa Eldin responded that the EFSA has the same powers as its predecessors. In all, the EFSA’s agenda seemed maintenance of the status quo, at least for now.
He acquiesced one specific area in which the EFSA differed from its predecessors: promotion. Encouraging investment in Egypt will be the sole territory of the Ministry of Investment, not the EFSA. He pointed out that Egypt’s strong financial civil society, groups such as the Investment Management Association and the Mortgage Finance Association, for example, will prove as important as ministerial policies in attracting foreign investment.
Banks gave the example of the Qatari Financial Service Association, which encourages investment simply by emphasizing Qatar’s strong regulatory policies, which look particularly appealing in the wake of the de-regulation that compounded the financial crisis. Bahaa Eldin, however, repeated his denial that the EFSA would take any role in promoting Egypt as an investment recipient.
When questioned by Banks regarding the current dispute between France Telecom and Orascom Telecom over Mobinil, in terms of how the EFSA would manage cross border regulation, Bahaa Eldin showed reluctance to discuss the matter, terming it “an unfortunate dispute and reiterating the EFSA’s role as an “unbiased arbiter.
What he did want to discuss was the increased importance of cultivating the human resources available to the EFSA. Staffed by “regulators rather than “employees, Bahaa Eldin hopes to empower his staff as agents of a standardized institution.
The panel concluded with a semi-cryptic allusion to a microfinance lending law waiting in the wings. He also responded to questions regarding the slow pace of development of the bond trading and short-selling products in Egypt by saying that in the context of the past year’s financial uncertainty, he considered it wise to move into these riskier products with caution.
