The Egypt Financial Regulatory Authority issued a regulatory decision governing securities borrowing for the purpose of short selling, establishing a centralised lending system with real-time oversight that is executed exclusively through the central depository and clearing company, Misr for Clearing. The framework sets pre-trade collateralisation, broker eligibility conditions, concentration limits, daily revaluation and margin call mechanics, and mandatory termination events, while preserving lenders’ financial rights during the loan. Loan requests are matched by priority based on the lowest offered lending rate, then the longest duration, then time of entry into the system. Borrowers must post collateral equal to 150% of the open position value, comprising 100% of the value of the borrowed shares plus a 50% cash margin, with additional collateral alternatives permitted under the applicable controls; collateral and borrowed securities are revalued daily using exchange closing prices, and if coverage falls to 140% the client must restore it to 150% within two business days or the shares are returned without reference to the client. Brokerage firms seeking to conduct the activity must meet financial, operational and integrity requirements including minimum net shareholders’ equity of EGP 5 million for stand-alone activity or EGP 10 million when combined with margin trading, an average liquid capital ratio of at least 15% over the prior six months, a dedicated unit with at least three qualified experts, and specified accounting and audit assurances; the cash margin must be held in a separate account and may be invested, by agreement with the client, only in fixed-income instruments. The decision caps lendable supply at 25% of a listed issuer’s free float, limits any single lender (and related group) to 5% of that free float and any single borrower (and related group) to around 2%, and requires immediate termination in cases including removal of the security from the eligible list, precautionary attachment or disposal bans or the investor’s death, and corporate actions such as mergers and acquisitions, tender offers, splits or liquidation.
Egypt Financial Regulatory Authority 2026-03-09
Egypt Financial Regulatory Authority issues rules for centralised securities lending for short selling with 150% collateral and concentration caps
The Egypt Financial Regulatory Authority has decided on securities borrowing for short selling, establishing a centralized lending system with real-time oversight through Misr for Clearing. The framework includes pre-trade collateralization, broker eligibility conditions, concentration limits, daily revaluation, and margin call mechanics, ensuring lenders' financial rights. Borrowers must post collateral equal to 150% of the open position value, and brokerage firms must meet specific financial and operational requirements.