Egypt stock exchange exec sees 20% rise in volumes after short-selling

Egypt’s stock trading volumes are expected to blossom between 15 percent and 20 percent after allowing short-selling, designed to improve liquidity, chairman of the stock exchange said Monday.

The bourse management is in talks with Egyptian financial regulator (EFSA) and the Egyptian Central Securities Depository House (MCDR) to introduce short-selling before the end of the current year, Mohamed Farid told Amwal Al Ghad on the sidelines of an Euromoney conference.

Short-selling — a strategy in which a speculator sells an asset that he or she does not own in order to profit from a falling market.

It had never been used in Egypt’s still-developing stock market due to a lack of technical infrastructure and careful state control of the market, but the bourse has asked regulators to allow dealers to use it for a range of assets.

The International Organisation of Securities Commissions (IOSCO) has also reviewed short-selling and securities lending practices across markets and has recommended transparency of short-selling, rather than prohibit it.