Egypt: Financial Regulatory Authority Approves Model Short Selling Contract
The Egyptian Financial Regulatory Authority has approved a model contract for short selling under Decision No. 155 of 2026, with trading through the central lending system currently in a trial phase.
Dr. Islam Azzam, Chairman of the Egyptian Financial Regulatory Authority, approved a model short selling contract for brokerage firms and securities borrowers under Board Decision No. 155 of 2026.
The model contract defines margin rules, collateral revaluation, mark-to-market position monitoring, as well as mandatory buy-in mechanisms and cases in which positions are closed.
Trading is conducted through the central securities lending system at MCDR, a system currently undergoing live operational testing prior to full deployment.
The contract establishes the contractual framework for lending and short selling operations in the Egyptian market, while actual operation remains tied to the readiness of the central lending system undergoing testing.
What do these terms mean?
Short Selling: Selling securities not owned by the seller, with the intention of buying them back later at a lower price to profit from the price difference.
Margin: A cash amount or collateral deposited by a trader to cover potential losses in a transaction.
Mark-to-Market Valuation: Recalculating the value of collateral and positions based on prevailing market prices.
Mandatory Buy-In: A broker purchasing securities to close a short seller's position upon a breach of collateral conditions.
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