Egypt: FRA sets conditions for brokerage firms to trade carbon emission reduction certificates

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Egypt - Mohamed Farid, Chairperson of the Financial Regulatory Authority (FRA), has issued decision No. 1732 of 2024, outlining the conditions for securities brokerage firms to obtain FRA approval to trade carbon emission reduction certificates.

This initiative is part of the FRA’s ongoing efforts to accelerate the activation of the African voluntary carbon market. The FRA has completed all necessary legislative and regulatory frameworks to launch this market, which will register voluntary reduction projects and trade carbon emission reduction certificates. This market positions Egypt as a leader in Africa, encouraging companies to engage in carbon reduction activities and processes, generating returns by complying with global standards and enabling the trade and listing of these certificates.

This decision aligns with the FRA’s plan to finalize all steps necessary to launch the voluntary carbon market, following the recent issuance of trading and settlement rules for voluntary carbon certificates in cooperation with the Egyptian Exchange.

Decision No. 1732 of 2024 specifies that brokerage firms seeking FRA approval to trade carbon emission reduction certificates must have a minimum issued and paid-up capital of EGP 15 million and equity not less than the paid-up capital at the time of application.

Additionally, the decision mandates that firms provide the necessary technological infrastructure and data protection and security measures as defined by the FRA. They must also implement electronic systems that facilitate the trading and settlement of carbon emission reduction certificates.

Brokerage firms must appoint an authorized trader responsible for handling these certificates, who has completed the FRA-specified training program. Alternatively, firms can submit an undertaking that the trader will complete the training once the FRA schedules it. Moreover, firms must maintain detailed records and accounts of trading activities and ensure no regulatory actions have been taken against them in the six months preceding the application, except for warnings.

Firms that meet all conditions can apply for FRA approval to trade carbon certificates, submitting documentation proving they fulfil all requirements. The FRA will decide on the application within one week, and a lack of response within this period will be considered a rejection.