The Chairperson of Egypt’s Financial Regulatory Authority (FRA), Mohamed Farid, said that the authority recognizes the importance of developing financial markets for the Egyptian economy.
He spoke at the opening sessions of the eighth Annual Capital Markets summit, organized by Media Avenue under the theme “Structural Reforms – Sustainable Development.” He said: “There is no quick fix for all the problems… but we are working to find solutions through your great efforts.”
He said that the FRA, in collaboration with the Egyptian Exchange (EGX), has made and continues to make many changes to the listing rules. “We aim to protect the rights of investors, their right to information, and the availability of complete and clear disclosures. All these changes take time to implement.”
Farid added that global markets have long understood the vital role of the financial market in hedging against inflation. He said that pension funds in many foreign countries invest a large portion of their funds in stocks.
He also said that startups play a key role in challenging economic times, as they grow faster than the market and regular companies. He said that the FRA supports these companies with many efforts.
He revealed that the Financial Regulatory Authority has taken several steps to prepare for the launch of a carbon market in Egypt.
“The main challenge that the FRA faced was classifying carbon certificates, whether they are commodities or securities to be traded. We decided that they are securities.”
He added that the market needs more awareness of how to deal with carbon certificates, as they are a new product. He said that the authority needs to create specific legislation for the verification and certification bodies for carbon certificates.
Farid explained that carbon certificates require a verification body to assess the environmental impact of proposed projects and whether they can reduce carbon emissions. It also measures the current carbon emissions to see if they have achieved their goals.
He added that the FRA has issued rules and conditions for registering verification companies, which must have international certificates to comply with the standards. It has also issued rules for registering green projects, which will be linked to the certificates. It has also worked to allow the trading of futures contracts on carbon certificates on the stock exchange.
Moreover, the FRA has issued some clarifications on the accounting standards that can be used for carbon certificates. It said that if a company obtains a carbon certificate for trading, it must include it under the heading of financial instruments. But if the company issues a certificate, it will be treated as an asset.
Farid pointed out that the authority has also amended the criteria for evaluating emerging companies, which differ from regular companies because they lack an operational history. It has issued a set of common standards that can be used, so that companies do not issue evaluations without clear bases.
He emphasized the Authority’s strong interest in using and developing technological techniques and infrastructure, which are not merely websites or apps, but rather complex systems that require careful planning.
Farid said that the most important development was the issuance of the electronic “Know-your-customer” licence, which enabled companies to access more customers at a lower cost than the conventional methods of marketing and growth. He said that this feature was offered to insurance companies.
