Asset management companies that want to use artificial intelligence-based advisors require at least: LE 15M capital: FRA

Cairo – May 27, 2024: The Financial Regulatory Authority (FRA) has established the “Robo-Advisor Investment” framework, regulating the new frontiers of FinTech/asset management in Egypt.

In a document detailing the regulations and requirements for companies wanting to use such robotic advisors, the FRA explained that “an automated financial advisor provides investment advice electronically to clients based on an analysis of their degree of risk, investment objectives and financial solvency.”

“The automated financial investment advisor creates and manages an investment portfolio consisting of securities and financial instruments listed on stock exchanges, and their functioning is periodically monitored and assessed,” FRA added.

Asset management firms must have a minimum capital of LE15 million to obtain a license to operate using robo-advisors, as well as submit quarterly reports detailing their performance.

Other conditions include submission of approved evidence of working principles, adoption of principles for the design and selection of algorithms, and continuous review, development and updating of algorithms.

FRA emphasized that companies have an obligation to fully commit to ensuring that their cybersecurity efforts are resilient against all risks.

The regulations will be implemented on the basis of Act No. 5 of 2022 on the use of financial technologies in non-bank financial activities.