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The Financial Regulatory Authority (FRA), chaired by Dr. Islam Azzam, convened an extensive meeting with key financial market leaders to discuss the upcoming regulatory framework for short selling (selling of borrowed securities) on the Egyptian Exchange (EGX), which is slated for release within days.

The meeting brought together key capital market leadership, including:

Omar Radwan, Chairman of the Egyptian Exchange (EGX).

Dr. Khaled Serry Siam, Chairman of Misr for Central Clearing, Depository and Registry (MCDR).

Mohamed El-Sayad, Vice Chairman of the FRA.

Mohamed Sabry, Vice Chairman of the EGX.

Eng. Hisham Mabrouk, Managing Director of MCDR.

Representatives from brokerage firms, technical teams, and market stakeholders.

Mechanism and Market Dynamics

The framework regulates the borrowing and lending of securities for short-selling purposes. Under the mechanism:

Borrowers (investors anticipating a share price drop) borrow stocks from lenders, sell them at current market rates while depositing a cash margin collateral, and buy them back at lower rates to realize a profit (minus borrowing fees).

Lenders (original shareholders) retain their ownership benefits while earning additional yield from lending a portion of their equity holdings.

Centralized Lending System and Operational Readiness

Dr. Azzam highlighted the technical foundation laid by MCDR in launching a centralized lending system. The automated platform records available lending pools, share quantities, permitted durations, interest rates, and client data, ensuring full transparency across all borrowing and settlement phases.

The new rules establish direct digital integration between brokerage firms and MCDR to ensure real-time risk management, precise responsibility mapping, and clear investor protection safeguards.

Executive Leadership Insights

Addressing the market participants, Dr. Islam Azzam emphasized that the regulatory framework was crafted through continuous dialogue with market stakeholders:

"The new framework for short selling will expand available investment strategies, enable more efficient portfolio management, and boost market liquidity. It is expected to drive increased participation from foreign institutional investors and younger market entrants by allowing them to capitalize on price movements and reinvest gains."

Azzam commended MCDR's technical readiness and urged all brokerage firms and market entities to rapidly finalize their operational and technical preparations to facilitate a seamless market launch following years of legal and technical deliberations.