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President of State Council and FRA?s Chairman inaugurated a panel discussion on Regulating Non-Banking Financial Markets and Instruments – Wednesday 19/2/2020

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• The President of the State Council and FRA’s Chairman inaugurated a panel discussion on regulating Non-Banking Financial Markets and Instruments
• Dr. Omran: FRA’s decisions aim to protect investors and increase confidence in non-banking financial activities
• Dr. Omran: We seek to create an attractive investment environment characterized by fairness, transparency and integrity

Counselor / Mohammed Mahmoud Hossam El Din – President of the State Council and Dr. Mohammed Omran – FRA’s Chairman inaugurated the third panel discussion ” Regulating  Non-Banking Financial markets and Instruments” for State Council members to increase knowledge and awareness on non-banking financial activities.

President of the State Council expressed the eagerness of Council’s members to exchange experiences and learn more about developments in various economic legislations related to non-banking financial activities. He added that Council’s members are keen to discuss technical aspects for each activity and contribute to building economic backgrounds that can be taken into consideration when reviewing legislations related to non-banking financial markets and tools and upon expressing a legal opinion related to non-banking financial activities. Counselor Mohammed Hossam expressed his wish to hold series of similar discussion sessions in the future – at the Council’s headquarters – to be available to a large number of Council members, so that young judges of the State Council can be briefed on these technical aspects from specialists.

For his part, Dr. Mohammed Omran – FRA’s Chairman asserted that providing protection to investors dealing in non-banking financial instruments is a necessity and a basis for ensuring confidence in the overall financial system and transactions, adding that enhancing confidence will in turn contribute to creating an attractive investment environment characterized by fairness, transparency and integrity.

FRA’s Chairman said that due to the dynamic nature of non-banking financial activities, foremost of which is Capital Market that has the tendency to change in order to keep pace with the tremendous progress in information, while ensuring transparency and clarity in transactions that take place on multiple financing tools. He added that the practical application has resulted in an urgent need for a continuous change in legislative frameworks regulating these non-banking financial instruments. In this respect, holding seminars – regularly- with one of the greatest judicial castles in Egypt is needed to enrich knowledge and exchange experiences between relevant parties to clarify facts behind developing regulatory rules and to conduct needed amendments to legislative frameworks.

In his opening speech to the third panel discussion entitled “Regulating Non-Banking Financial Markets and Instruments”, Dr. Omran noted that without legal frameworks based on the latest international practices – which passed through procedural steps defined by the Egyptian constitution – the Authority would not be able to perform its regulatory duties. He added that in light of the uncertainty that may prevail upon taking investment decisions related to complex financial products where individual investors may find it difficult to understand its risks, the regulator must issue  regulatory decisions that  would maintain the integrity and stability of non-banking financial markets.

FRA’s Chairman clarified that the seminar’s specialized program focused for two days on informing the attendees of the institutional structure of the Capital Market and companies operating in the field of securities. Also, it shed light on the positive aspects shown in FRA’s statistics in 2019 after introducing new amendments to the Capital Market Law and its Executive Regulations issued by ministerial decree No. 2479 of 2018, which is the most important in more than 26 years.

FRA’s Chairman revealed that  (13) companies were established  in 2019 including  several activities such as securitization  for the first time in Egypt, financial advice, portfolio formation and management, venture capital, charitable investment funds and bond brokerage. The Authority also granted 11 banks license to promote and cover IPOs. Moreover, FRA granted two companies license to be engaged in investment funds activity on their own or with others in accordance with the provisions of FRA’s Board of Directors decision no. (85) of 2018. In addition to granting license for (52) brokerage firms to practice short selling. On the other hand, (11) financial consulting firms regularized their status and listed on financial valuation registry.

That is besides FRA’s initiative to issue the first detailed guide on investors’ protection in non-banking financial activities to enhance investors’ protection in all activities. According to this guide, an obligation is imposed on companies and entities operating in the field of non-banking financial activities to comply with the principles set forth in investors’ protection guide and to inform their clients with them.

Activities of the first day also included informing the attendees of the Authority’s march during the past twelve months to implement its comprehensive strategy for non-banking financial services (2018-2022) on developing different legislations. The said legislations represented in the Consumer Finance Law, the Unified Insurance Law, and amendments to the microfinance laws to include small, and medium-sized enterprises finance in addition to micro-finance. That is besides the Central Depository and Registry Law, which allows the establishment of settlement and clearing companies specializing in government securities and other futures contracts. In that context, Mr. Abdel Hamid Ibrahim – member of FRA’s Board of Directors presented Stock Market developments and the regulatory framework to activate Futures Exchange and its rules, in addition to shedding light on Sukuk as a reliable financing tool for many in the Egyptian market.

On the second day of the event, Dr. Ziad Bahaa Eldin – FRA’s first Chairman clarified the Authority’s role in supervising and regulating non-banking financial markets and instruments between reality and expectations and FRA’s relationship with the Executive Authority in the light of the provisions of constitution.

Finally, the meeting concluded with a general discussion session moderated by Counselor Reda Abdel Moaty, Vice- Chairman of the Authority on legislations regulating non-banking financial activities at all levels, jurisdiction of the administrative judiciary to consider appeals against FRA’s decisions and the availability of submitting grievances against FRA’s decisions.

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Regulator Information

Abbreviation: FRA
Jurisdiction: Egypt

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