Egypt’s Financial Regulatory Authority has issued a framework governing securities borrowing for sale, enabling regulated short selling through a central lending system connecting the Egyptian Exchange, the central securities depository, brokerages and custodians. Eligible securities will be selected under exchange criteria approved by the authority. Brokerages must assess clients’ financial capacity, maintain documented account and control systems, and collect cash collateral of at least 50% of the borrowed securities’ market value before borrowing occurs. Borrowed securities may not exceed 40% of a listed company’s free float, while each borrower and its related parties are limited to 2%. Contracts linking a brokerage, lender and borrower are subject to a 5% cap. The central securities depository must monitor limits, conduct daily valuations and margin settlements, retain and invest sale proceeds for lenders, and ensure lenders receive financial rights arising during the loan period. Voting rights remain with the owner of the securities on the date of the relevant general meeting. The authority may remove eligible securities, adjust collateral haircuts, suspend participants or brokerages, or revoke a brokerage’s approval to conduct short selling. Brokerages must have at least EGP 5 million in net shareholders’ equity, rising to EGP 10 million if they also conduct margin trading, and an average net liquid capital ratio of at least 15% over the preceding six months. Approved firms will have one month from the framework’s entry into force to install the required technology. The rules will take effect on the day after publication in the Egyptian Gazette.

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