The Financial Regulatory Authority (FRA) has proposed amendments to the Capital Market Law’s executive regulations to the Cabinet, introducing rules for the establishment of hedge funds. This initiative is designed to expand the range of investment tools and enhance the Egyptian market’s competitiveness and appeal.
Hedge funds are flexible investment vehicles that operate in financial markets with fewer regulatory constraints than other types of investment funds. They typically pursue high-risk strategies aimed at generating substantial returns and require investors to meet minimum wealth or income criteria.
Mohamed Farid, the FRA Chairperson, linked the increase in securities offerings from public companies to the government’s management of its financial assets and the private sector’s strategic considerations. He emphasized that market efficiency hinges on a diverse pool of traders and investors, which contributes to accurate pricing, market depth, and transaction volume.
Farid highlighted the FRA’s comprehensive regulations and decisions on transferable value funds, which have spurred the creation of specialized gold investment funds. These funds offer a straightforward and transparent savings and investment avenue.
He mentioned the ongoing efforts to establish transferable value funds for other commodities, such as silver, following the successful launch of the “AZ-Gold” fund by Azimut in May 2023 and the subsequent approval of the Beltone Evolve Fund in 2024.
Additionally, Farid discussed the Authority’s advancements in legislative and regulatory frameworks, which have led to the establishment of Africa’s first voluntary carbon emissions trading market. This market offers diverse investment opportunities and assists companies in aligning with global trends, particularly in accessing European Union markets through carbon reduction projects that meet international standards.
Looking ahead, Farid revealed plans to license “Robo-Advisory” services for portfolio and investment management. This digital advisory system guides investors towards suitable investments based on their risk tolerance and recommends optimal stocks or risk-free instruments like treasury bills and bonds. It operates by continuously analyzing market conditions to identify timely investment opportunities.
Finally, Farid noted the crucial role of artificial intelligence in digital and technological advancements, emphasizing its reliance on current data for effective training and output generation.
