Egypt Financial Regulatory Authority finalizes preparations for short selling and plans imminent rule changes

The Egypt Financial Regulatory Authority held an expanded meeting with the Egyptian Exchange, Misr for Central Clearing, Depository and Registry, brokerage firms and investor representatives to complete final preparations for activating short selling in the stock market. Chairperson Islam Azzam said finishing the regulatory and operational framework is a top priority and that the authority will soon amend the existing short selling decision to reflect new system changes agreed with the exchange, the clearing house and market participants. The discussions focused on the readiness of the exchange and the clearing infrastructure, including full connectivity between brokerage firms and Misr for Central Clearing, and on the central securities lending system that will document each stage of the process. That system is intended to record securities available for lending, names and quantities, lending tenors and accepted rates, borrowing transactions, lender and borrower data, and the closeout of borrowing transactions. The review also covered broker participation requirements, financial solvency and operational capability standards, client money protections, concentration controls and regulatory transaction limits. Under the existing framework, brokers must obtain acceptable collateral of at least 50% of the market value of borrowed securities, monitor total collateral, revalue borrowed securities at the end of each business day on a mark-to-market basis using the latest closing price, and manage margin calls throughout the lending period. The authority said coordination and consultation with the relevant institutions will continue ahead of launching the mechanism soon under a revised and fully supervised framework.