Gamal Moharram intends to apply for new FRA licence for credit rating of securities

Gamal Moharram, founder of the Egyptian Factoring Federation, will cooperate with an international financial institution to establish a new company that will apply to obtain a licence for credit rating of securities, sources revealed.

The sources told Daily News Egypt that the consortium was awaiting the announcement of the licence criteria, explaining that there is interest from several other investors to obtain the licence.

Last Tuesday, the Board of Directors of the FRA approved criteria for granting a licence for credit rating of securities.

According to an official statement from the authority, the door will be opened for those wishing to apply for the new licence to present required documents within three months from the date of publication of the decision which set 5 criteria for the licence.

Mohamed Farid, Chairperson of the Financial Regulatory Authority, said that the Authority constantly studies and analyses the market needs to issue the necessary regulatory controls to achieve sustainability of the non-banking financial sector.

Farid pointed out that the FRA realized that the Egyptian stock market needs another company to practice credit rating activities, along with the current company, adding that licensing more than one company working in the field of credit rating will enhance the capabilities of the financial sector in general, and increase competition in a way that serves the interests of dealers, including institutions, markets, and customers, in addition to allowing dealing with more than one alternative, and in light of the growth in the volume of bond issuances, especially securitization bonds.

He explained that the licensing criteria aims to achieve transparency, as the selection criteria include all the details of the comparison between the applicants.

Farid stressed that the conditions and criteria are objective and have been prepared with the guidance of international practices in this field with the aim of classifying the applications for obtaining this licence and selecting the application that achieves the highest degree of compatibility with these criteria.

He added that the credit rating agencies play a vital role in the stock markets, and contribute to the efficient capital allocation to serve investment opportunities according to their return and risk, because they evaluate and classify the quality of the various securities traded in the financial markets.