Egypt nears launch of short selling as final preparations advance
Egypt is nearing the launch of short selling on the Egyptian Exchange (EGX), with technical preparations and training for licensed brokerage firms nearing completion, the Financial Regulatory Authority (FRA) said on Wednesday.
FRA Chairman Islam Azzam met senior officials from the EGX, Misr for Central Clearing, Depository, and Registry (MCDR), brokerage firms, and other market participants to review preparations for implementing the new short-selling framework.
Azzam said technical requirements and training procedures should be completed soon and stressed the need for coordination among market participants to ensure the mechanism operates efficiently from launch, the FRA said in a statement.
The meeting reviewed the development of a Central Lending System that links MCDR, the exchange, brokerage firms, and custodians to support the electronic processing and documentation of securities-lending transactions.
The system will allow short sellers to view available securities for lending and select suitable offers, while lenders will be able to view lending offers registered on the platform, the FRA said.
Brokerage firms licensed to conduct short-selling transactions will undergo training on the new infrastructure. They will be required to establish the necessary technology systems and connect to the Central Lending System.
Azzam said the activation of short selling was more than “a decade-long-awaited” development, describing it as part of a broader effort to rebuild and develop Egypt’s capital-market instruments.
His comments came after the launch of the derivatives market and futures contracts, as well as new rules governing the establishment of hedge funds and allowing existing investment funds to conduct hedge-fund activities for the first time. The changes allow eligible funds to engage in short selling and invest in financial derivatives, the FRA said.
The FRA said short selling could increase market liquidity, improve price discovery, and deepen the Egyptian stock market.
Azzam stressed that the mechanism is to be implemented with a balance between transparency, governance, and investor protection, in line with international best practices.