Asset and portfolio management
FinTechs belonging to this category offer asset and portfolio management services via an internet platform or software programs and usually manage and dispose of the assets of their customers long or short term according to their specifications without actually holding the property or the possession of those assets. FinTechs, which provide information about and access to overnight or time deposit accounts at national and foreign banks and which execute the transactions to these accounts, also belong to this category. Some FinTechs however only act on request of the customer.
Aside from that some FinTechs offer software or internet solutions enabling users to manage and plan their personal finances on their own by providing graphics, overviews and compilations of their financial data and sometimes indicating financial risks or opportunities, but without actually managing the assets.
Attitude of the country towards modern asset and portfolio management services
Experts and local market asset management company officials expect the current year to be better off than before, with companies willing to expand, target a larger volume of managed assets, launch new funds, and some turning their services to individuals. In 2021, the Asset management activity decreased with many public investment funds closing with negative returns averaging between eight (8) and 10 %.
However, asset management companies operating in the local market have the intention to expand in 2022, aiming to increase the volume of managed assets by obtaining the right to manage new investment funds, or to leverage new portfolios.
Egypt has a policy of spreading financial inclusion and opening accounts to small savers, providing them with an investment in any amount at any time so that investment is available to all categories of citizens and not exclusively to businesses and investors.
The exchange has launched a media campaign to encourage small savers to invest in the exchange by adding a sum to invest through portfolio management companies.
The FRA also monitors the prevention of any breach by the Governor's management companies, such as the transformation of their pattern of operation to brokerage activity and the carrying out of sales and purchases on shares, in the form of prompting the FRA to study ways of preventing the recurrence of such a bad phenomenon. In addition to the Board's unannounced rounds of inspections of the Governor's Management Companies, in the event of the discovery of irregularities, a penalty is imposed without the need for a key item that could be harmful to all companies operating in the market.
Obligations and requirements to provide asset and portfolio management, or ancillary services described above
A license from the Financial Regulatory Authority (FRA) is required in order to start the activity and the needed documents are a commercial register, a statement by board members and directors that they have at least five (5) years of experience, an indication that the company's headquarters is equipped with equipment and tools to engage in business, an indication that the company paid the payment of insurance to the FRA, a bond to the company's headquarters, founders, board members and directors reputable, the performance of the company's stake in the Securities Dealer's Insurance Fund, and confirmation by the managing director of the company that he is responsible for the actual management of the company.
The license fee is estimated to be 10,000 EGP.
Additional comments regarding the legal situation for asset and portfolio management services or what FinTech’s must be aware of in this business area
No company may cease its activity or liquidate its operations except with the approval of the Board of Directors of the FRA after it has been established that the company has finally discharged its obligations in accordance with the conditions and procedures established by the Board of Directors of the FRA.
In addition to the forgoing, the activity of the company may be suspended if it violates the provisions of this Act, its implementing regulations, or the decisions of the Board of Directors of the Authority issued pursuant to it, or if it loses any of the conditions of the license.
Market size for asset and portfolio management services and biggest companies in this business area
The asset management business in Egypt is not very familiar to the people. In Egypt, any business usually starts as a private firm. Previously, people worked with brokers, and it is only of late that they are gradually working with asset management companies. This branch is still in its early stages. It has a lot of potential to expand over the coming years because it is very small, but it is growing rapidly.
Additional comments regarding the economic situation for asset and portfolio management services or what FinTech’s must be aware of in this business area