FRA Chairman Dr. Mohamed Farid described the move as a historic step aimed at diversifying investment tools and enhancing risk management in line with international standards.
Derivatives are financial contracts such as futures,
options, and swaps, that derive their value from underlying assets like stocks
or price indices.
Farid said the market will launch in four stages, beginning
with futures contracts on the blue-chip EGX30 index. Trading is expected to
commence in March.
The second phase will introduce futures for the EGX70 index,
followed by futures on individual stocks, and finally options contracts for
both stocks and indices.
"The launch of the derivatives market is a primary
pillar of the FRA’s strategy to build more advanced and sustainable financial
markets," Farid said. He added that the move follows months of
coordination with the EGX and the Egypt for Information Dissemination (EGID) to
ensure high governance and investor protection.
Seven brokerage firms have already applied for licenses to
act as intermediaries in the new market, reflecting strong local interest.
Proponents say the introduction of futures will deepen
market liquidity and allow investors to hedge against price fluctuations. The
market will also offer leverage, allowing for more flexible portfolio
management.
EGX Chairman Islam Azzam said the exchange has developed an
in-house trading program to accelerate the rollout. He noted that technical
integration between firms and clearing houses should be finalized within a
month.
Azzam added that the move has already drawn interest from
foreign investment funds.
"Foreign funds have requested meetings with the
exchange to discuss trading opportunities, a clear sign of international
confidence in the development of the Egyptian market," Azzam said.
To mitigate systemic volatility, the regulator is implementing a comprehensive risk management system. This includes margin requirements, both initial and variation, and a guarantee fund structure involving contributions from clearing members and the Investor Protection Fund.