Securities Brokerage Firms and Securities Trading: How Can I Trade Safely in Egypt?

Many people ask us: “How do I open an account with a brokerage firm?”, “Can I buy shares without a brokerage firm?”, “Is this firm licensed?” and “What if the brokerage firm loses my money?” The answer: securities listed on the Egyptian Exchange may be traded only through a brokerage firm licensed by the Financial Regulatory Authority (FRA); anyone dealing with an unlicensed entity places their funds without genuine legal protection.

What is a securities brokerage firm?

A joint-stock company licensed by the FRA to act as an intermediary in buying and selling securities for its clients' account, in return for a commission, and to execute client orders on the Exchange.

What is securities trading?

It is the buying and selling of shares, bonds, investment fund units and other securities listed on the Egyptian Exchange through an electronic trading system. Trades are settled and title is transferred through Misr for Central Clearing, Depository and Registry.

Which bodies regulate this activity?

Capital Market Law No. 95 of 1992 and its Executive Regulations govern it. The FRA supervises the sector, the Egyptian Exchange operates the market, and Misr for Central Clearing, Depository and Registry handles deposit, registration and settlement.

How can I verify that a firm is licensed?

Before paying any amount, ask the FRA or the Egyptian Exchange to confirm the firm's registration and its licence to carry on brokerage activity. Do not rely on a marketing employee's statements or a social media advertisement.

How do I open an account and start trading?

Sign an account-opening agreement with the firm, submit your details and identification documents, and obtain your Unified Investor Code. You then deposit funds and place buy and sell orders, which the firm executes for you on the market.

What obligations does the brokerage firm owe me?

It must execute your orders faithfully and accurately and notify you of their execution, keep your data confidential, segregate client funds from its own, comply with the financial solvency requirements set by the FRA, and refrain from price manipulation or the use of undisclosed information.

What is margin purchasing, and is it risky?

It is the purchase of securities with partial financing from the firm, and it is permitted only to a firm that has obtained the FRA's prior approval. The risk is that your losses may exceed the amount you deposited, so do not sign the agreement before reading all of its terms.

What should I do to avoid being implicated or harmed?

Do not sign blank documents or blank orders, do not transfer money to the personal account of any employee or intermediary, and do not believe promises of guaranteed profits, since no profit is guaranteed on the Exchange. Keep your account agreement, execution confirmations and account statements, and review them regularly.

What are my rights if a brokerage firm has harmed me?

You may file a complaint with the FRA, claim compensation before the competent court or through arbitration where an arbitration agreement exists, and file a criminal complaint where the conduct amounts to fraud or breach of trust.

What are my rights if I am accused?

Do not sign anything, do not put your signature to any paper, and do not say a word except in the presence of your lawyer.

What is the penalty for the offence?

The Capital Market Law prescribes criminal penalties, including imprisonment and fines, for practising brokerage without a licence, for manipulating securities prices, and for trading on undisclosed inside information, in addition to administrative sanctions the FRA may impose on violating firms.

Is the sentence subject to pardon, or must it be served in full?

There is no automatic pardon; a presidential pardon is discretionary and cannot be relied upon. Where the sentence is imprisonment, conditional release is discretionary rather than mandatory and is subject to the period and conditions set by law, which a lawyer verifies case by case.

What should I do if I cannot handle the situation and have fallen into trouble?

Keep our number with you or with a family member: +201208555806, and call us immediately so that we can intervene as quickly as possible to protect you.

If you have a problem and are unsure whether it falls under brokerage and securities trading or under another legal characterisation, and you want legal advice on it, you may consult a specialised lawyer.

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This article is general information for legal awareness and does not replace legal advice on your particular situation.