The Financial Regulatory Authority (FRA) has issued a new decision setting out detailed requirements and conditions for licensing futures brokerage activity, marking a further step in completing the legislative and regulatory framework governing Egypt’s derivatives market.
The move is aimed at strengthening risk management standards, ensuring the operational readiness of market participants, preserving market stability and safeguarding investors’ rights.
Decision No. 7 of 2026, approved by the FRA’s Board of Directors at its meeting on 14 January 2026 under the chairmanship of Mohamed Farid, currently Minister of Investment and Foreign Trade and former FRA Chair, introduces a comprehensive set of financial, technical and administrative controls. The framework is designed to ensure that futures brokerage activity is conducted in line with the highest standards of governance, transparency and institutional discipline.
Under the new rules, companies applying for a futures brokerage licence must have issued and fully paid-up capital of no less than EGP 50m, or its equivalent in foreign currency, paid in cash. Applicants are also required to comply with ownership structure and shareholder ratio regulations applicable to non-banking financial activities, particularly the provisions of Decision No. 177 of 2024.
In addition, firms must deposit a cash guarantee equivalent to 0.05% (half per mille) of their issued and paid-up capital. This guarantee is intended to cover financial obligations arising from potential breaches of regulatory controls. A non-refundable fee of EGP 5,000 is payable for the examination of each licence application.
The decision mandates the establishment of a secure and integrated technological infrastructure, including central servers, licensed operating systems, advanced data protection systems and an effective internal control framework to ensure legal compliance and business continuity. Firms are also required to maintain separate back-up premises to be activated in the event of emergencies, ensuring uninterrupted operations.
Companies must prepare a comprehensive risk management manual covering the identification, measurement and monitoring of market, credit, concentration, operational and liquidity risks, alongside clearly defined policies and procedures for mitigating, supervising and reporting such risks in a manner consistent with regulatory requirements and sustainable operations.
The decision sets explicit eligibility conditions for board members and senior executives. Board members must enjoy a sound professional reputation and must not have been convicted of crimes relating to honour or integrity during the preceding five years. A majority of board members, including the chairperson, must have at least five years’ experience in stock exchange and securities market activities. The managing director must be fully dedicated to executive management, while the operations manager is required to have no less than seven years’ relevant professional experience.
Futures brokerage firms are required to appoint no fewer than 12 key officers, including a chief executive officer, operations manager, trading manager, risk manager, internal controller, anti-money laundering and counter-terrorism financing officer, finance manager, accounts manager, internal auditor, futures execution officer, information systems and security officer, and human resources officer. Specific professional qualifications and experience thresholds apply to a number of these senior roles.
The decision also imposes strict obligations in relation to client transactions. Companies must verify clients’ financial capacity before executing orders, properly manage margin accounts and monitor client positions on a daily basis in line with settlement prices and margin requirements. Firms may join a clearing and settlement company as a clearing member in accordance with applicable regulations.
The FRA has further stressed the strict confidentiality of client data. Written contracts, based on the Authority’s approved template, are mandatory and must clearly define collateral arrangements, commissions and procedures in cases of non-payment. Companies are expressly prohibited from guaranteeing clients against losses or setting maximum loss limits. They must also provide clients, at the time of contracting and annually thereafter or upon any material amendments, with a clear explanatory statement outlining the nature and risks of trading in futures contracts.
Record-keeping requirements stipulate that documents and records must be retained for a minimum of five years in hard copy and 15 years in electronic form. The FRA retains the right to inspect these records and conduct on-site examinations to verify compliance with regulatory standards.
The decision also regulates the position of existing securities brokerage firms seeking to add futures brokerage to their activities, requiring them to meet the stipulated capital and equity thresholds, demonstrate the absence of outstanding administrative sanctions and submit complete technical and financial documentation.
Companies already licensed to conduct futures brokerage at the time the decision enters into force are granted a three-month grace period to regularise their status. An extension may be granted subject to justification acceptable to the Authority.
Overall, the decision reflects the FRA’s strategic direction towards establishing a well-regulated and efficient futures market, supported by robust governance standards and advanced risk management tools. By tightening entry requirements and strengthening supervisory mechanisms, the Authority aims to enhance the competitiveness of Egypt’s capital market and reinforce investor confidence among domestic and international participants.
