Egypt’s FRA finalises framework for short selling on EGX

Egypt’s Financial Regulatory Authority (FRA) is finalising preparations to launch short selling on the Egyptian Exchange, Chairman Islam Azzam said on Wednesday, adding that the regulator would soon amend the relevant rules to reflect changes agreed with market participants.

Azzam made the remarks during a meeting with officials from the Egyptian Exchange, Misr for Central Clearing, Depository and Registry (MCDR), brokerage firms and investors to discuss the final operational and regulatory arrangements for launching the mechanism.

He said amendments to FRA Decision No. 365 of 2026 would incorporate changes agreed between the FRA, the Egyptian Exchange, MCDR and market participants. The discussions covered participation requirements for brokerage firms, financial solvency standards, technical and operational capabilities, safeguards for client funds and concentration limits.

The meeting also reviewed MCDR’s central securities lending system, which will record all stages of lending and borrowing transactions, including securities available for lending, lending terms and data on lenders and borrowers.

Under the rules, brokerage firms will be required to obtain collateral of at least 50% of the market value of borrowed securities, conduct daily mark-to-market valuations based on closing prices and implement margin calls during the lending period.

Azzam said short selling had been under discussion for years and was widely used in international markets as a tool to improve liquidity and price discovery.

He added that the mechanism was expected to broaden investment options and support the development of Egypt’s capital market.

The FRA said it had put in place a regulatory and supervisory framework with the Egyptian Exchange and MCDR to manage risks and protect market participants.

Attribution: Amwal Al Ghad English

Subediting: Y.Yasser