EGYPT: EFSA Issue Statute of the Investor Protection Fund

Friday June 10 2016

The Egyptian Financial Supervisory Authority (EFSA)[GE1]  Board of Directors (BOD)[GE2]  decision on issuing the statute of Investor Protection Fund was published in the Egyptian Gazette (Issue No.18- A).

According to the EFSA, the Egyptian Investor Protection Fund (EIPF) covers the actual financial loss of dealers against the risks related to the companies’ activity, such as bankruptcy, default, violating the contract signed with the client, fault, negligence, and fraud.

The Fund has proposed a draft of its statute and it was reviewed by EFSA. A number of amendments were set; the fund was notified of these amendments and they were approved. Consequently, EFSA’s decision was issued.

The Investor Protection Fund will provide cover of up to half a million pounds per client, including securities, and a debit balance resulting from the client’s transactions in securities not exceeding one hundred thousand pounds. The Fund may compensate the clients by purchasing the same securities by the compensation value. In all cases, the Fund does not pay compensation for any financial losses resulting from changes in the value of securities or resulting from the loss of alternative opportunities.

The EFSA also noted that in light of the market’s conditions, market capitalisation indicators, trading, risk assessment and the amount of money available at fund, the Fund’s BOD may amend the periodic subscription fees as well as the coverage provided for the dealers in the market. These amendments shall be applied only after being approved by EFSA’s BOD.

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