The FRA decided to double the maximum amount of funds invested by companies in commodity and metal investment fund certificates or any metal-backed financial certificates or instruments traded on the Egyptian Stock Exchange, to a maximum of 10%, instead of 5%.
The decision stipulated that the value of funds invested in a single investment fund certificate shall not exceed 5% of the total funds to be allocated, or 15% of the net asset value of the investment fund.
This decision is an important step toward increasing transaction values and liquidity in the market and enhancing stability. This will encourage increased investment in the stock exchange and enhance the depth and attractiveness of the market, which in turn will lead to increased confidence in the insurance market and ensure that insurance companies' funds are managed in a manner that achieves a balance between maximizing returns and protecting the rights of insured persons.
This comes as a continuation of the Authority's ongoing efforts to provide flexible regulatory and legislative frameworks that enable companies to invest their funds through various channels. These efforts will contribute to enhancing investment efficiency and supporting the financial stability efforts of the insurance sector, in accordance with the principles of governance and risk management.
Through its recent regulatory decisions, the Authority has obligated private insurance funds to invest a portion of their funds in open-ended investment funds in stocks listed on the Egyptian Stock Exchange. This will contribute to strengthening the funds' investment systems with administrative competencies licensed by the FRA to manage and allocate funds with the required efficiency, as well as diversifying investment options.
This comes in implementation of Unified Insurance Law No. 155 of 2024, the first comprehensive law for the sector, which was previously regulated by four separate laws. The law mandated the Authority's Board of Directors to establish the rules, regulations, and procedures governing the sector's performance. This represents a significant step towards policies and procedures aimed at regulating and digitizing financial transactions and promoting the use of financial technology to increase the number of beneficiaries of insurance coverage. The law takes into account all global developments and practices and is integrated with the Egyptian state's vision and development goals, particularly enhancing levels of insurance coverage.
The FRA continues its efforts to enhance the efficiency and effectiveness of the insurance sector and is committed to continuing to develop legislative and regulatory frameworks and to introducing supportive initiatives and policies that contribute to raising the efficiency of the insurance market and achieving the goals of social protection, financial sustainability, economic inclusion, and access to insurance services for all stakeholders.