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Wednesday, 18 July 2018

FRA completes Capital Markets Act regs, to make life insurance mandatory for SME financing

LEGISLATION WATCH- FRA completes Capital Markets Act regs allowing sukuks, margin trading, futures market, green bonds: The Financial Regulatory Authority (FRA) completed yesterday the final amendments on the executive regulations for the new Capital Markets Act, which include provisions that govern the issuing of green bonds, sukuk, margin trading, and futures exchanges, FRA boss Mohamed Omran said yesterday, Amwal Al Ghad reports. Short-term bonds appear to be the only major financial instrument that didn’t make it into the regs. We heard last month, though, that the FRA had begun fleshing out new legislation that would open the door for issuing short-term bonds.

In other news from the FRA: It looks as though life insurance will be compulsory for recipients of subsidized financing for SMEs after all, as per an agreement yesterday between FRA and the SMEs Association, Omran said yesterday, according to Al Mal. The Egyptian Federation of Insurance has been tasked with preparing a price list for insurance policies which will be divided into tranches based on the size of the facility, he added. Omran had said last month that the initiative seeks to ensure that some 2.4 mn entrepreneurs who have received some EGP 8.4 bn in subsidized SME financing as of 1Q2018 have insurance coverage. FRA has made insurance for SMEs a crucial component of its strategy to reform the wider insurance sector, which it is undertaking primarily through amendments to the Insurance Act.

Strategy for non-banking financial sector unveiled in two weeks: This comes as part of the FRA’s strategy for the development of the non-banking financial sector, which will be unveiled in full in two weeks’ time, according to Omran. We had first heard of the strategy back in April. Omran had said at the time that it would involve both structural and legislative reforms to boost the industry and improve its contribution to economic growth, will pave the way for the introduction of new financial instruments.

Meanwhile, the FRA is looking into how best to implement a mandatory insurance policy for public venues and gatherings, including sporting tournaments and concerts, FRA boss Mohamed Omran said, Al Masry Al Youm reports. The policy would also be applicable to spaces such as malls, cinemas, and sporting clubs, according to Omran. He did not disclose when FRA expects to complete its studies on the matter.

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