Another step forward for Egypt’s VCM: Egypt’sFinancial Regulatory Authority (FRA) has issued the registration and delisting rules for companies looking to sell certified carbon credits on the EGX, according to a statement released on Thursday.

Breaking down the rules: Applicants must submit a request to the FRA for their carbon emission reduction projects to be registered in its database, including necessary documentation such as environmental impact assessment studies, design documents, evidence of registering on voluntary carbon registers, and other verification reports.

Carbon certificates can be traded on the stock exchange once projects are officially registered, the statement added. This requires a separate process of providing details of the name and identification code of the project, its geographical location, the name of its developer, and its time period. The applicant will also be required to disclose the methodology used to issue certificates, the number of certificates issued, the number of certificates that will be traded on the exchange, and its initial price. A committee will issue its decision within five working days from submission. The applicant must open an account with a licensed settlement and clearing company to be eligible for consideration.

Regulation for carbon credit futures contracts were also announced: Under the new regulations,companies that own or finance projects aimed at reducing carbon emissions are eligible to apply for futures contracts, the statement notes. Similar to the process of stock exchange issuance, requirements for registering forward contracts for carbon reduction certificates include the submission of an application to the stock exchange with the project’s details in addition to the contracting and delivery obligations, according to FRA.

SOUNDSMART- What are carbon credit futures? Carbon credit futures are a financial instrument that allows buyers to support carbon reduction projects without immediate direct investments. It mitigates investment risk by allowing two parties to trade carbon credits at a specific date and price in order to avoid fluctuating prices in the future. Carbon credit futures contract physically delivers carbon credits, with each futures contract being equivalent to 1k carbon credits generated from projects that protect natural ecosystems.

We knew this was coming: The FRA completed the regulatory framework for the voluntary carbon market in late February pending cabinet review. The state’s financial regulator also authorized three bodies to verify projects that claim to reduce carbon emissions to launch the voluntary carbon market earlier last month. The new regulator's mandate included establishing a rulebook outlining the requirements for issuing carbon credits, mapping out the greenhouse gas disclosure schemes companies would have to follow to verify their carbon output, and setting out the criteria for selecting verified carbon crediting bodies.

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