الهيئة العامة للرقابة المالية

FRA Imposes Urgent Penalties and Sanctions Over Illegal School Loan Scheme – Monday 24 August 2026

• Criminal action initiated against consumer finance firm, new contracts suspended for 30 Days, and strict measures imposed on key executives

In line with its constitutional mandate to oversee non-banking financial activities, regulate market transactions, and safeguard consumer rights, Financial Regulatory Authority (FRA), chaired by Dr. Islam Azzam, issued series of decisions and enforcement measures regarding an incident where an international school exploited parents’ personal data to secure loans from a consumer finance company.

The Authority launched an intensive four-day investigation immediately upon detecting reports of the incident, prior to receiving formal complaints concerning the credit ratings of affected parents.

Specialized technical teams from the non-banking finance, complaints, compliance and anti-money laundering departments were deployed immediately to conduct field inspections, in-depth audits and direct interrogations with all involved parties. Working in swift coordination with relevant authorities, these efforts successfully eliminated all adverse impacts on affected parents and completely canceled all resulting financial and credit obligations.

In light of the investigation findings, the specialized committee convened to review the violations and determine liabilities among the involved parties, in accordance with the provisions of Consumer Finance Law No. 18 of 2020 and its executive regulations.

Based on the committee’s recommendations, FRA Chairman Dr. Islam Azzam issued a decree detailing the following measures:

• Initiation of criminal proceedings against the consumer finance company regarding its violations of the governing regulatory law.
• A one-month ban prohibiting the consumer finance company from executing any new financing contracts.
• Immediate suspension of the company’s operations in school tuition and club membership financing products, banning new originations pending a full regulatory review of all such products by the Authority.
• Mandatory convening of the company’s General Assembly, in the presence of FRA representative, to address the attributed violations and implement measures to tighten internal controls.
• Canceling the Chief Executive Officer’s consumer finance license, alongside disciplinary measures enforced against several key executive officers for committing violations that affected market participants’ rights, pursuant to FRA Board Resolution No. 45 of 2026.

These sanctions were grounded in Article (22) of Consumer Finance Law No. 18 of 2020 following critical breaches of corporate governance, credit inquiry rules, financing rules and anti-money laundering protocols.

FRA emphasized that its regulatory enforcement operates independently from ongoing investigations by the Public Prosecution which has been formally notified of the facts.

Through these swift actions and enforcement measures against the involved parties, the Authority aims to achieve maximum protection for market participants against illicit practices, safeguard consumer funds and maintain transaction stability across the non-banking financial sector.

The Authority strongly emphasizes that all entities operating under its supervision must strictly comply with the regulatory framework established to verify customer identity and data accuracy, in accordance with Board Resolution No. 186 of 2024 and its amendments.

FRA Reduces Service Fees for Sustainable Securities – Monday 10 August 2026

Dr. Islam Azzam – FRA  Chairman:

• This decision aligns with the latest amendments to the Capital Market Executive Regulations, reflecting the Authority’s unwavering commitment to environmental, social and governance (ESG) goals.

FRA Board of Directors chaired by Dr. Islam Azzam, has issued a landmark resolution cutting service fees for reviewing sustainable securities applications. The move aims to encourage companies to issue specialized debt instruments that directly fund environmental, climate, and community development projects in line with Egypt Vision 2030.

Under the new resolution, fee reduction extends beyond traditional green bonds—previously governed by Board Resolution No. 141 of 2019—to encompass all sustainable instruments introduced in the Executive Regulations of the Capital Market Law. The expanded framework includes Sustainable securities and Sustainability-Linked Bonds, Social Bonds, Gender and Women’s Empowerment Bonds, Climate Bonds and Transition Bonds targeting industrial emission reductions.

The said resolution cuts FRA service fees by 50% for reviewing and examining offering applications for these sustainable securities, applying equally to public offerings and private placements.

FRA Chairman Dr. Islam Azzam stated that the resolution aligns directly with recent amendments to the Executive Regulations of the Capital Market Law. These amendments position sustainable securities as conditional financing instruments tied to sustainable development goals, while maintaining the issuer’s obligation to repay the principal and yield.

He reaffirmed the Authority’s commitment to support large-scale projects that address key social and environmental objectives, thereby maximizing the non-banking financial sector’s role in improving overall quality of life.

FRA Chairman explained that proceeds from sustainable securities are utilized to finance a wide array of developmental projects. These encompass green projects, initiatives fostering women’s empowerment and gender equality, projects aimed at reducing carbon footprints and mitigating global warming, as well as schemes targeting pollution abatement, harmful gas reduction, water pollution control and energy efficiency programs.

FRA Regulates Hedge Fund Operations and Establishment for the First Time – Sunday 9 August 2026

• The resolution establishes regulatory rules for launching new hedge funds and enables existing investment funds to enter the sector.
• Defining investment manager duties, essential prospectus elements and investment policy standards.

Dr. Islam Azzam, FRA Chairman:

• Hedge funds will activate the stock market alongside the rollout of derivatives and short selling.
• They offer greater flexibility through diversified tools, unlocking access to new local and global investor segments.
• This resolution strikes a balance between investor protection and sound investment decisions.

FRA Board of Directors chaired by Dr. Islam Azzam, has issued a landmark resolution regulating—for the first time—the establishment of hedge funds.

The new framework permits hedge funds to invest in equities, debt instruments, derivatives (such as futures and traded options), borrowed securities for short selling on the Egyptian Exchange (EGX) and other high-liquidity financial instruments.

Under the new resolution, FRA will license hedge funds in accordance with the investment limits and guidelines specified in their prospectuses or information memorandums, subject to FRA approval. It also allows existing investment funds to operate as hedge funds under designated controls, pursuant to Capital Market Law No. 95 of 1992 and its Executive Regulations.

Dr. Islam Azzam, FRA Chairman stated that opening the door to hedge fund creation—and enabling existing funds to engage in hedge fund strategies—marks a crucial milestone following recent amendments to the Capital Market Law’s Executive Regulations. He highlighted that this move will yield wide-ranging benefits alongside ongoing EGX developments aimed at expanding and deepening the market, as hedge funds enhance operational and investment flexibility while boosting activity in derivatives market.

Dr. Islam Azzam noted that hedge funds are uniquely positioned to attract new domestic and foreign investors through diversified, return-maximizing strategies. Because these strategies demand specialized expertise to navigate shifting market conditions, FRA resolution explicitly outlines fund managers’ obligations—striking a balance between investor protection and sound investment decision-making.

He emphasized that the resolution strikes a crucial balance between investment diversification and unitholder protection. It mandates that a fund’s investment policy explicitly outline key parameters, including permissible financial leverage limits and calculation methodologies. Funds must also disclose potential risks—such as amplified losses, liquidity constraints, margin calls, forced liquidations and market volatility—alongside the risk management policies and procedures implemented by the investment manager.

FRA Chairman stressed that investment managers must provide periodic disclosures to both the Authority and unitholders regarding specific metrics outlined in the resolution. These include leverage levels, stress testing results following material market shifts, any breaches of investment or risk thresholds along with executed corrective actions, and all material changes to investment strategies—ensuring full transparency and safeguarding investor rights.

The licensing procedure begins either by submitting an application to establish a new hedge fund or by an existing investment fund applying to convert its status into a “multi-issuance fund” (umbrella fund) dedicated to investing in listed securities and financial instruments, with authorization to employ specialized trading mechanisms and investment strategies approved and regulated by the FRA.

The resolution requires any investment fund company seeking to engage in hedge fund operations to submit proof of board approval for modifying its prospectus or information memorandum. The updated prospectus must reflect the fund’s structural change and specify an asset allocation consisting of listed securities and instruments on Egyptian exchanges, units of open-ended or exchange-listed funds, exchange-traded futures and options contracts, or any other financial instruments approved by the FRA Board of Directors.

Regarding the prospectus or information memorandum, the resolution mandates several key inclusions beyond the baseline requirements of the Capital Market Law’s Executive Regulations. Specifically, it must detail the fund’s investment policy, target investor eligibility, and verification protocols for placement agents. Furthermore, it requires a comprehensive risk management framework outlining leverage caps, liquidity limits, stop-loss mechanisms, stress testing, and counterparty exposure controls—particularly across derivatives and securities lending or borrowing activities.

Furthermore, the prospectus or information memorandum must include: the methodology for evaluating fund performance—including risk-adjusted return indicators and benchmarks for performance comparison—the obligations of the investment manager and any additional disclosures required by the Authority.

As a core element of the prospectus or information memorandum, the fund’s investment policy must clearly outline key operational parameters. At a minimum, this includes target sectors, asset allocation limits, and the manager’s primary investment strategies and risk profiles. Additionally, it must define protocols for specialized trading tools—such as derivatives, short selling and margin trading—alongside financial leverage limits, borrowing caps, liquidity policies and redemption terms, including deferral or suspension triggers.

The resolution outlines key obligations for investment managers, requiring specialized hedge fund expertise and robust technical infrastructure to execute fund strategies. Managers must periodically assess counterparty credit risk, monitor leverage within prospectus caps and maintain collateral adequacy across all transactions. Additionally, they are mandated to perform regular stress testing and scenario analyses to assess resilience during extreme market volatility and ensure collateral adequacy across all executed transactions—without prejudice to their statutory duties under the Executive Regulations of the Capital Market Law.

The resolution will be published in Al-Waqa’i’ Al-Misriyya and on FRA’s official website in the coming days, taking effect the day following its publication.

Tags: Investment Funds, Egyptian Exchange (EGX), Capital Market, Dr. Islam Azzam – FRA Chairman, Short Selling, Hedge Fund Operations and Establishment.