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Arab Finance: The Financial Regulatory Authority (FRA) intends to grant the Egyptian Exchange (EGX) a license to trade financial derivatives by the end of January 2026, as part of ongoing coordination on the regulatory framework governing derivatives trading, as per a statement.
The move aims to attract new segments of investors and diversify investment instruments in the Egyptian capital market.
Speaking during his keynote address at the seventh annual Hapi Journal conference, FRA's Chairman Mohamed Farid said the Egyptian capital market has seen rapid and unprecedented developments in recent years, reflected in the growing number of new investors and the significant expansion in the size and value of investment funds.
He attributed this progress to a comprehensive package of regulatory and legislative reforms implemented by the FRA, including the development of financing mechanisms, improvements in market efficiency, and the expansion of non-banking financial services, which have strengthened financial inclusion and linked markets more closely to the real economy.
Farid stressed that these developments were the result of integrated strategic plans built on a clear vision to establish a modern regulatory and legislative framework for non-banking financial activities and products, tailored to the characteristics of the Egyptian market.
He added that the FRA has adopted growth-supportive policies for the non-banking financial sector that balance financial stability with market expansion, while safeguarding the rights of market participants.
Among the areas that have received increased regulatory focus in recent years are entrepreneurship, investment funds, participatory financing in real estate projects, and venture capital activity.
Farid described these as key tools for supporting economic growth, encouraging innovation, and providing sustainable funding sources for startups and emerging projects.
He also reiterated the authority’s view that financial services are a fundamental right, noting that organized savings and access to insurance are essential to financial stability, with insurance serving as a risk management tool rather than just a financial product.
Farid said the primary role of any financial regulator is to achieve financial and market stability, which forms the basis of confidence in the financial system, followed by efforts to deepen and develop markets.
He explained that the FRA’s executive plan was built on several pillars, including changing public perceptions of non-banking financial activities, continuously updating regulatory decisions in line with global best practices, and issuing 14 regulatory laws, 11 of which have already been implemented.
He added that international rules have been adapted to suit local conditions, pointing to the special purpose acquisition companies' (SPAC) experience, which led to the establishment of the first Egyptian SPAC.
He also highlighted the launch of regulated carbon markets as a pioneering step that aligns financial markets with climate change priorities and sustainable finance. According to Farid, the FRA moved early to require financial companies to measure their carbon footprint, preceding similar international practices.
These efforts have contributed to improved performance across non-banking financial activities, with market capitalization reaching about EGP 3 trillion and daily trading volumes approaching EGP 8 billion, alongside a wider beneficiary base for consumer finance, microfinance, and insurance services.
As part of efforts to enhance trading tools, Farid said the authority is working on introducing short selling and market making, following technical and regulatory adjustments to support liquidity and trading volumes.
He reiterated that the planned licensing of the EGX for derivatives trading fits within this broader agenda to diversify products and attract new investors.
Farid concluded by urging citizens to make greater use of insurance services to manage life’s risks and called on insurance companies to expand their outreach, particularly through digital channels.
