Asset management firms looking to use AI-powered advisors require min. LE 15M capital

“Robo-advisors for Investment” framework has been set by the Financial Regulatory Authority (FRA), regulating the new frontier for FinTech/asset management in Egypt.

In a document detailing regulations and requirements for firms looking to utilize these robo-advisors, the FRA explained that “The automated financial advisor for investment provides investment advice to customers electronically based on analyzing their degree of risk, investment objectives, and financial solvency”.

“The automated financial investment advisor creates and manages the investment portfolio consisting of securities and financial instruments listed on the stock exchange’s tables, and their performance is monitored and evaluated periodically,” the FRA added.

Asset management firms are required to have a minimum capital of LE 15 million to obtain a license to operate using robo-advisors, as well as to submit quarterly reports detailing its performance.

Other conditions include submitting approved evidence regarding work policies, adoption of policies for algorithm design and selection, and continuous review, development, and updating of algorithms.

The FRA stressed that firms are obligated to be fully committed to ensuring their cybersecurity efforts are capable against any risks.

The regulations will be implemented under Law No. 5 of 2022 regarding the use of financial technology in non-banking financial activities.