الهيئة العامة للرقابة المالية

FRA Approves New Short-Selling Rules to Boost Stock Market Liquidity  – Monday 9 March 2026

• A real-time, transparent lending system managed exclusively through MCDR.
• Lending requests are prioritized based on three standardized criteria.
• Participating firms must meet strict requirements across three primary pillars.
• Transactions require 150% initial collateral, comprising full share value plus a 50% cash margin.
• Daily re-valuation of borrowed securities and collateral based on closing prices.
• A maximum cap of 5% for a single lender and 2% for a single borrower of the listed company’s total free-float shares.

Financial Regulatory Authority (FRA) has issued a new regulatory framework governing Short Selling. Designed to enhance market efficiency, boost liquidity, and deepen the exchange, the mechanism aims to stabilize trading while safeguarding investor rights. The new system is built upon the following pillars:

1. Centralized Lending System

The regulations mandate a Centralized Lending System characterized by transparency and real-time oversight. Operations are conducted exclusively through the execution agent, Misr for Central Clearing, Depository and Registry (MCDR).

The decree – issued by the Authority prior to Dr. Mohamed Farid’s appointment as Minister of Investment and Foreign Trade – defined the priority criteria. Lending orders are executed based on the lowest offered lending rate, followed by the longest duration, and finally, the time priority of order entry into the system.

A 150% pre-execution cash collateral is mandatory for all open positions. This comprises 100% of the borrowed securities’ value and a 50% cash margin, subject to approved alternative collateral guidelines.

1. Key Requirements for Brokerage Firms

To ensure robust risk management, FRA has established a three-pillar compliance framework for brokerage firms:

• Solvency & Capital Adequacy: Net shareholders’ equity must be at least EGP 5 million for standalone short selling activity, or EGP 10 million if combined with margin trading. Firms must maintain a minimum Liquid Capital Ratio (LCR) of 15% for the six months preceding their application.
• Technical & Operational Efficiency: Firms must establish a specialized department with at least three certified experts. Additionally, they must implement advanced accounting systems – validated by an external auditor- to ensure compliance with record-keeping and internal audit requirements.
• Integrity & Client Asset Protection: Firms must have a clean regulatory record (no judicial rulings or administrative measures) for the six months prior to the application. Furthermore, “Security Margins” must be held in segregated accounts and may only be invested in fixed-income instruments upon client agreement.

III. Concentration Limits & Regulatory Caps

To maintain market stability and prevent price manipulation, FRA has set the following exposure limits:

• Borrowable securities may not exceed 25% of a listed company’s total free-float shares.
• A single lender (and its related group) is capped at 5% of free-float shares, while a single borrower (and its related group) is capped at 2%.

1. Daily Oversight & Margin Call Mechanisms

A rigorous monitoring system ensures collateral adequacy throughout the lending period:

• Borrowed securities and all provided collateral are revalued daily based on stock exchange closing prices.
• If collateral value drops to 140%, the client must replenish it to 150% within two business days. Failure to comply triggers an automatic buy-back/return of shares without further notice.

1. Financial Rights & Mandatory Termination

FRA ensures that original owners (lenders) retain their economic interests:

Lenders retain all financial rights, including cash dividends, bonus shares from capital increases, subscription rights, and any other corporate actions.

The decree also outlines the mechanisms for returning shares, which can be executed either through the borrower’s existing securities balance or by re-purchasing shares from the open market using the sale proceeds.

The decree specifies three cases that necessitate the immediate termination of the lending process to ensure the stability of legal positions.

• The security is removed from the list of eligible short-selling stocks.
• Legal actions occur, such as asset freezes, disposal bans, or the death of the investor.
• Corporate restructuring, including mergers, acquisitions, tender offers, demergers, or liquidation.

Presidential Decree: Dr. Islam Azzam Appointed Chairman of the Financial Regulatory Authority – Monday 9 march 2026

President of the Republic has issued Decree No. 116 of 2026, appointing Dr. Islam Azzam as the Acting Chairman of the Board of Directors of the Financial Regulatory Authority (FRA).

Dr. Azzam becomes the sixth Chairman to lead the Authority since its establishment under Law No. 10 of 2009 which regulates oversight of non-banking financial markets and instruments.

This appointment aligns with the State’s mandate to bolster the efficiency and competitiveness of the non-banking financial sector (NBFS), reinforcing its role as a primary driver of economic development. Dr. Azzam brings extensive expertise in non-banking financial markets, regulation, and oversight. He previously served as the Executive Chairman of the Egyptian Exchange (EGX) during the second half of 2025, following his tenure as Vice Chairman of the FRA from January 2021 to August 2025, where he oversaw the capital markets, insurance, and non-banking financial activity sectors.

Dr. Azzam has held several prominent leadership roles, including Advisor to Chairman of Mortgage Finance Authority (2007–2009) and Assistant to Chairman of Capital Market Authority (2003–2005). He also served as Managing Director of the “Bedaya” SME Fund.

His experience extends to board memberships in various prestigious economic and financial institutions, including: Board of Trustees of the Egyptian Money Laundering and Terrorist Financing Combating Unit (EMLCU) and Board of Directors of the Egyptian Arab Land Bank (EALB), as well as the Egyptian Center for Voluntary Arbitration. Additionally, he served as a board member for several major corporations, including Misr Insurance Holding Company, Dakahlia Sugar Company, Egyptian Resorts Company (ERC), and Al Shams Housing and Development.

During his previous tenure at FRA, Dr. Azzam was instrumental in developing the regulatory framework for the insurance sector following the issuance of the Unified Insurance Law No. 155 of 2024. He led the community dialogue with stakeholders to draft executive regulations which included raising minimum capital requirements for insurance companies, updating investment rules for insurance funds and private pension funds, and establishing solvency margin protocols to ensure sector stability and policyholder protection.

Furthermore, he contributed to executive decisions regarding non-banking finance activities, notably setting minimum capital requirements for financing companies and implementing Basel III standards across their operations.

He announced the launch of the first phase of financial derivatives market, introducing futures contracts to the Egyptian market for the first time – providing advanced hedging and risk management tools to attract global investment.

Dr. Islam Azzam emphasized  FRA’s commitment to develop the non-banking financial sector to support the national economy. His strategy focuses on developing legislative frameworks, strengthening regulatory oversight, and enhancing digital infrastructure to ensure market transparency, efficiency, and stability.

On the academic front, Dr. Azzam served as a Professor of Finance at the American University in Cairo (AUC), where he chaired the Graduate Studies in Finance department from 2005 to 2021. He has held academic and visiting positions at international institutions, including the University of Stellenbosch (South Africa), the London School of Economics (LSE), and the University of California, Irvine (UCI), as well as Cairo University’s Faculty of Economics and Political Science.

He holds a Ph.D. in Economics from UC Irvine (2003), specializing in Econometrics, Economic Forecasting, and Monetary Policy. He also earned a Diploma in Real Estate Finance from the University of Pennsylvania (Wharton), an MA in Economics from UC Irvine, an MA in Economics from AUC, and a BA in Economics from Cairo University (1993).

It is noteworthy that FRA is the sole regulatory body responsible for regulating Egypt’s non-banking financial markets and activities. It was established to integrate three former regulatory bodies: Egyptian Insurance Supervisory Authority, Capital Market Authority, and Mortgage Finance Authority, while also assuming oversight of financial leasing and factoring activities.

FSI Launches a Tour in Assiut to Promote Non-Banking Financial Services –  3 March 2026

• This move toward direct outreach ensures FRA’s impact is felt on the ground.
• Improving citizens’ living standards by raising awareness of micro-project financing opportunities.
• Experts provided practical workshops on micro-insurance.

As part of its social responsibility, Financial Regulatory Authority (FRA) launched a field tour in Assiut through its training arm, the Financial Services Institute (FSI). This move represents a practical shift toward direct citizen engagement, aiming to raise awareness of non-banking financial services (NBFS) as tools for business growth and improved living standards.

This tour aligns with FRA’s strategy to translate theoretical knowledge into tangible local impact. By interacting directly with citizens and civil society organizations, FRA is building bridges of trust between regulators and the community. This collaborative effort involves various FRA departments, including FSI, Awareness and Financial Literacy Department, and Media Center.

The visit featured specialized workshops addressing issues central to citizens’ livelihoods, notably sustainability and the impact of climate change on agricultural productivity. A key focus was sustainable finance mechanisms, particularly carbon credits, introduced as an innovative funding tool to help farmers expand their activities and secure new revenue streams.

Led by Dr. Tarek Seif (Executive Director of FSI), Rasha Kleib (Head of Planning, Follow-up, and Quality Assurance – FSI), and Eng. Omar El-Nemer (Carbon Markets Expert), the delegation focused on the accessibility of micro-finance and micro-insurance. These products are designed to scale existing micro-projects and incentivize new ventures, driving comprehensive development within the governorate.

The sessions witnessed high levels of engagement, with residents inquiring about financing mechanisms, consumer protection guarantees within NBFS markets, and FRA’s regulatory role. Representatives provided transparent, direct answers to reinforce trust and promote the responsible use of financial instruments.

On the sidelines of the tour, a coordination meeting was held with “Al-Afdal Association” – a civil society organization under the Ministry of Social Solidarity. The talks focused on enhancing services for farmers and building the capacity of the association’s staff through specialized training in non-banking finance, positioning the association as a local hub for financial literacy.

The tour extended its reach to children through simplified interactive activities and the distribution of custom-made FRA booklets. These resources aim to instill concepts of saving and financial planning at an early age, reflecting a long-term vision to build a financially literate generation.

FRA confirmed that this tour is the first in a series of planned field visits across Egypt’s governorates. This initiative is rooted in a vision to economically empower citizens, enabling them to utilize non-banking financial services as genuine drivers for sustainable development and a better quality of life.