Egypt's FRA tightens licensing framework for futures brokerage

Egypt's Financial Regulatory Authority has issued a new decision outlining detailed requirements for licensing futures brokerage activity, advancing the legislative framework for the country's derivatives market. The measure seeks to bolster risk management standards, ensure operational readiness of participants, maintain market stability, and protect investor rights.

The Financial Regulatory Authority's (FRA) Board of Directors approved Decision No. 7 of 2026 during its meeting on 14 January 2026, chaired by Mohamed Farid, the current Minister of Investment and Foreign Trade and former FRA Chair. The decision introduces comprehensive financial, technical, and administrative controls to ensure futures brokerage activity adheres to the highest standards of governance, transparency, and institutional discipline.

Companies seeking a futures brokerage license must maintain issued and fully paid-up capital of at least EGP 50 million, or its foreign currency equivalent, paid in cash. They must also comply with ownership structure and shareholder ratio rules under Decision No. 177 of 2024. Additionally, a cash guarantee equal to 0.05% of the capital is required, along with a non-refundable application examination fee of EGP 5,000.

The rules mandate a secure, integrated technological infrastructure, including central servers, licensed operating systems, advanced data protection, and an effective internal control framework for legal compliance and business continuity. Separate backup premises must be maintained for emergencies to ensure uninterrupted operations.

Firms are required to develop a risk management manual addressing the identification, measurement, and monitoring of market, credit, concentration, operational, and liquidity risks, with defined policies for mitigation, supervision, and reporting in line with regulations.

Eligibility for board members and senior executives includes a sound professional reputation and no convictions for crimes involving honor or integrity in the past five years. A majority of board members, including the chairperson, must have at least five years' experience in stock exchange and securities activities. The managing director must be fully dedicated to executive duties, and the operations manager requires no less than seven years' relevant experience.

At least 12 key officers must be appointed, including a chief executive officer, operations manager, trading manager, risk manager, internal controller, anti-money laundering officer, finance manager, and others, each with specified qualifications and experience thresholds.

For client transactions, companies must verify financial capacity before order execution, manage margin accounts, and monitor positions daily according to settlement prices. Firms are prohibited from guaranteeing clients against losses and must use written contracts based on the FRA's template, including clear collateral, commissions, and non-payment procedures. Client data confidentiality is strictly required, and an explanatory statement on futures trading risks must be provided at contracting and annually. Records must be kept for five years in hard copy and 15 years electronically, subject to FRA inspections.

Existing securities brokerage firms adding futures activity must meet capital thresholds, show no pending sanctions, and submit full documentation. Licensed futures brokers have a three-month grace period to comply, with possible extensions upon justification.

The decision aligns with the FRA's strategy to build a regulated, efficient futures market backed by strong governance and advanced risk tools, aiming to boost Egypt's capital market competitiveness and investor confidence domestically and internationally.

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