The FRA’s records show that there are 64 companies with a license to manage investment funds
Licensed investment fund management companies will be able to now manage the financing of purchases of securities on margin after Chairman of the Financial Regulatory Authority (FRA), Mohamed Omran, issued Executive Decision No. 46 of 2021 today.
The decision is aimed at maximizing the efficiency of the capital market and achieving transparency in the mechanisms dealing with activities specialized in securities, explained Omran.
The FRA’s records show that there are 64 companies with a license to manage investment funds.
Following the approval of the Authority’s Board of Directors, he noted that companies licensed to manage investment funds must commit to contracting with securities brokerage companies.
These brokerage companies must have obtained the approval of the Authority to engage in the activity of buying on margin for securities, he added.
“Taking into account that the contract includes means of avoiding interests, the most important of which is the extent to which the brokerage companies that are considered to be among the persons associated with the investment manager can be financed, in addition to a statement of the guarantees that the investment manager must obtain from the brokerage companies obtaining the financing,” he noted.
Omran also highlighted that the financing of brokerage companies when practicing margin purchases should be limited to the list of securities that meet the conditions and standards set by the Stock Exchange and approved by the Authority.
FRA recently allowed factoring companies, which purchase the accounts receivable from their clients, to provide services of deducting future financial rights to brokerage companies in securities. This is to consequently lead to further activation of trading operations in securities on the Egyptian Stock Exchange.
