The Board of Directors of the Financial Regulatory Authority (FRA), headed by Mohamed Farid, issued several regulatory decisions regarding investment funds in minerals as one of the transferred financial values, in light of what the provisions of Article (35) of the Capital Market Law allow the Board of Directors of the Authority to authorize the fund to deal in values, movable financial assets, including metals.
The Authority’s Board of Directors issued Decision No. 50 of 2023 to amend the Authority’s Board of Directors’ Decision No. 71 of 2021 regarding the controls for dealing with investment funds in minerals as one of the transferred financial values.
According to the decision, the fund’s board of directors or the fund’s supervisory committee may, without prejudice to their established obligations in this regard, seek the assistance of any of the mineral preservation service providers registered in the register prepared for this purpose in the Authority.
The investment manager is obligated to deal in buying and selling minerals through the entities registered in the register, and taking into account the controls set by the Authority in this regard, with the Fund’s obligation to provide the Authority with a copy of the contract concluded between it and the aforementioned service providers.
The decision included the conditions that must be met by the providers of the mineral preservation service in terms of the legal form of its establishment, the availability of the minimum technical and technological requirements determined by the Authority, the conditions that must be met in the premises and safes in which the Fund’s assets are kept in a secure manner, as well as the availability of systems and foundations for internal control and financial audit and what is useful for the company has a system for storing and retrieving customer instructions.
The aforementioned decision also included the obligations of the providers of mineral preservation services, and the most important of these obligations is to maintain separate accounts for each investment fund, provided that it provides the Authority with periodic quarterly data on the assets of each fund, while providing separate places for storing minerals for each fund separately, providing an insurance policy issued by one of the companies Insurance licensed by the Authority, throughout the contract period, provided that it includes the scope of insurance coverage at a minimum insurance for the risks of fire, burglary, loss and damage for any reason, breach of trust including negligence or negligence on the part of workers, the risks of forced theft during the transport of minerals by cars within Egypt, natural disasters, and additional risks, and the scope of insurance coverage must also include risks associated with transportation and shipping if agreed for the company to do so.
The period of registration in the register shall be three years and shall be renewed for similar periods, provided that the application for renewal is submitted within the three months preceding the expiry of the registration period. Renewal of registration in the register requires the fulfillment of the conditions required for registration and its continuity.
The Board of Directors of the Authority, headed by Mohamed Farid, also issued Resolution No. 52 of 2023 regarding the controls for registration and deletion in the Authority’s register of entities that investment funds must deal with in the purchase and sale of minerals.
The decision included a number of conditions that must be met by the service provider, which contributes to increasing the efficiency of the investment process for this category of funds. One of the most important of these conditions is that these entities take an institutional form, so that they are one of the companies whose purposes include dealing in minerals in buying and selling, and they are licensed to do so from the competent authorities with the availability of a minimum of previous experience for at least two years, and to be among the member bodies of the Egyptian Commodity Exchange within the category (A) trade companies, which deals in the metal for its own account or for the account of its clients as a broker in addition to membership in one of the federations, associations, or professional associations, provided that it has linkage systems with a pricing service for minerals approved by the Authority and announced.
The aforementioned decision also included that a committee comprising legal and technical elements for field and office examination was formed to ensure that the conditions and documents required for registration are met, and the Authority issues its decision in the application for registration within a period not exceeding fifteen days from the date of fulfilling the registration requirements in addition to the measures that the Board of Directors of the Authority may take in the event that the service provider loses one of the conditions for registration in the aforementioned register.
Mohamed Farid, Chairperson of the FRA, said that the recent decisions aim to regulate the dealing of investment funds in minerals as one of the transferred financial values, as part of the authority’s vision to diversify investment and savings options to meet the diverse needs of all categories of investors, in a way that contributes to improving levels of financial inclusion.
Farid explained that the decisions create records in the authority to register the providers of mineral preservation services, as well as the parties concerned with carrying out the tasks of buying and selling them, with the establishment of controls and requirements for their joining the register, in order to ensure the safety and accuracy of transactions and ensure the solvency of these financial and technical entities to carry out this activity.