الهيئة العامة للرقابة المالية

FRA Issues Model Short Selling Contracts for Brokerage Firms and Securities Borrowers – Wednesday 21 October 2026

Dr. Islam Azzam, FRA Chairman:

• Standardizing contracts to boost market transparency and streamline client-broker relations.
• Setting clear rules for party obligations, collateral management and position closing.
• Engaging market stakeholders during live central lending system trials.

In a pivotal step toward the official launch of short selling in Egyptian capital markets, Dr. Islam Azzam, FRA Chairman has issued a decision approving model short selling contract for brokerage firms and securities borrowers. Enacted under the new regulatory framework established by FRA Board Decree No. 155 of 2026, the decision establishes a clear contractual framework governing the relationship between the securities borrower—seeking to borrow securities available on the central lending platform at Misr for Central Clearing, Depository and Registry (MCDR)—and the licensed brokerage firm executing transactions on the borrower’s behalf.).

Short selling mechanism operates on the presence of a lending client who wishes to lend owned shares and securities borrower who seeks to borrow shares to execute a short sale with the intent to repurchase and return them to the lender at a later date if the stock price is expected to decline. Profit is thereby realized from the price differential between the sale and purchase prices, based on the investor’s market expectations and price projections, pursuant to a binding agreement executed with a licensed brokerage firm.

This model contract was finalized following extensive consultations with market stakeholders to leverage industry expertise and address practical operational requirements. This collaborative approach reflects FRA’s commitment to constructive community dialogue, ensuring the development of enforceable rules that balance operational efficiency, risk management, and investor protection.

The template comprehensively defines the procedural roles, rights and obligations of both brokerage firms and securities borrowers. It regulates key operational aspects including fees, commissions, and the distribution of yields generated from invested cash collateral. These provisions enhance operational efficiency, promote market transparency, and ensure investors fully understand the mechanism, its associated risks, margin maintenance protocols, and position closure triggers under regulatory or contractual rules.

To mitigate operational and market risks, the contract establishes several mandatory safeguards. Borrowers must post initial margin collateral—at or above the minimum thresholds mandated by FRA regulations—as specified in the contract annex prior to execution, while brokerage firms are legally required to deposit cash collateral into dedicated, segregated accounts restricted to short-selling transactions.

Furthermore, to minimize counterparty risk and safeguard market integrity, brokerages must continuously mark borrowed securities to market using real-time intraday closing prices and monitor the collateral-to-borrowed-securities ratio against regulatory and contractual minimums.

The contract sets clear protocols for defaults or delays in returning borrowed shares, requiring the brokerage to execute mandatory buy-ins subject to standard settlement cycles. It also outlines mandatory position closure events, such as a security’s removal from the eligible trading list or regulatory triggers arising from corporate actions like M&As, tender offers, spin-offs, or liquidations.

In addition, brokerage firms are obligated to provide clients with a comprehensive guide detailing short selling concepts, operational mechanics, risks and benefits, updating this guide after any regulatory revisions and distributing it to clients at least annually.

Regarding financial terms and yield management, cash collateral must be invested exclusively in FRA-approved instruments throughout the lending period. Brokers must inform clients of investment channels and actual yields, crediting returns directly to the client’s account upon receipt or according to agreed terms.

Regarding borrowing costs, the model contract mandates that brokerage firms clarify all expenses, commissions and other cash charges debited from the client, clearly stating the calculation basis for each. Future modifications to fees and commissions are strictly prohibited without the client’s explicit written consent.

Furthermore, the model guarantees the client’s right to issue buy and sell orders for borrowed securities, as well as to fully or partially close their open positions during the borrowing term in accordance with contractual provisions.

Dr. Islam Azzam highlighted that the model contract is a key milestone toward fully enabling short selling across Egyptian capital markets. The Authority is currently finalizing technical guidelines and practical manuals for all market participants in tandem with fine-tuning the MCDR Central Securities Lending (CSL) system through live trials. This ensures real-time operational integration between MCDR and brokerage firms, complete end-to-end transaction logging, and full market visibility. Under this setup, borrowers can view all available lending offers to select options aligned with their investment goals, while lenders can monitor market-wide lending bids.

FRA Chairman added that the standard contract unifies market practices, establishes clear operational boundaries for collateral administration, enforces position monitoring, and outlines strict remedies for margin calls or delayed share returns to protect all market participants.

To ensure regulatory and legal compliance, borrowers must explicitly certify ultimate beneficial ownership of the account, declare legitimate sources of funds, and submit required Customer Due Diligence (CDD) data pursuant to Anti-Money Laundering (AML) Law No. 80 of 2002 and related non-banking financial regulatory decrees.

Furthermore, licensed brokerages are bound by strict confidentiality mandates prohibiting the disclosure of client data or transaction records to third parties without prior written consent, except when responding to regulatory reporting mandates from FRA or lawful judicial orders.

It is worth noting that in a short-selling transaction, the securities borrower profits if their expectations of a drop in the borrowed security’s price are realized. In this scenario, the borrower repurchases the shares at a lower market price to lock in a profit margin and returns them to the lender, with borrowing costs deducted from the realized profit. Conversely, if the security’s price rises and the borrower wishes to limit their losses, they must repurchase the shares at the higher market price, incurring a loss in addition to paying borrowing costs.

In both cases, the securities lender earns a yield for lending their securities—typically approximating the risk-free rate plus an additional lending premium—while continuing to retain all underlying economic benefits associated with stock ownership.

FRA Releases 2025 Annual Performance Report for Private Insurance Funds– Tuesday 20 October 2026

• Fund assets rise to EGP 238.2 billion, and investments record EGP 210.9 billion, representing a growth of 25.5%.
• Total contributions reach EGP 23.4 billion, a 25.1% increase compared to 2024 and the number of beneficiaries reaches 4.2 million members.

Financial Regulatory Authority (FRA), chaired by Dr. Islam Azzam, has releases 2025 Annual Performance Report for Private Insurance Funds, detailing key financial and operational indicators, industry developments and growth across contributions, assets, investments and benefit payouts.

The report highlights the essential role these funds play in strengthening social safety nets by offering financial security to employees and members upon retirement or membership termination. Beyond safeguarding individual futures, private insurance funds aggregate long-term savings and channel them into diverse investment vehicles, thereby stimulating economic activity and deepening Egypt’s capital market and financial sector.

Operationally, active private insurance funds stood at 665 at year-end 2025—down slightly from 671 in 2024—with an additional 86 funds under liquidation, bringing the total number of funds to 751.

Overall membership reached 4.21 million members, underscoring the widespread reliance on these funds for long-term financial security.

On the financial indicators front, the total assets of private insurance funds rose to EGP 238.2 billion by the end of 2025, compared to EGP 195.7 billion at the end of 2024, representing a growth rate of 21.7%.

Furthermore, the value of reserve funds grew to approximately EGP 226 billion, compared to EGP 184.7 billion in the previous year, marking a growth rate of 22.3%. This reflects the reinforcement of the funds’ financial base and their enhanced capacity to fulfill obligations to their members in accordance with each fund’s bylaws.

Total investments recorded EGP 210.9 billion by the end of 2025, up from EGP 168.1 billion at year-end 2024, representing a growth rate of 25.5%. Meanwhile, net investment returns surged to EGP 40.6 billion, compared to about EGP 31.4 billion during the previous year—a growth rate of 28.9%. This reflects the expansion of the funds’ investment resources and highlights the importance of efficient management to generate yields that support meeting future liabilities, in line with Financial Regulatory Authority (FRA) decisions aimed at encouraging prudent deployment of funds’ savings to safeguard financial stability, protect subscribers’ interests, and maximize their benefits.

Regarding contributions, total contributions—including employer contributions—rose to EGP 23.4 billion during 2025, compared to EGP 18.6 billion in 2024, growing at a rate of 25.1%.

On the other hand, the value of insurance benefits paid out by the funds increased to EGP 20 billion during 2025, up from EGP 17.9 billion in the previous year, achieving a growth rate of 11.7%. This underscores the direct role of the funds in delivering financial entitlements to members upon the occurrence of designated insurance events.

Retirement benefits topped the list of insurance payouts, amounting to approximately EGP 13.45 billion, followed by periodic pensions at EGP 2.81 billion, and death-related benefits at EGP 1.22 billion.

Regarding investment allocation, the report’s data revealed a noticeable trend toward financial instruments tied to the banking sector and government debt. Government-guaranteed securities reached approximately EGP 88.27 billion.

Additionally, the value of deposits, certificates of deposit (CDs), and investment accounts detailed in the report stood at around EGP 88.05 billion. Investments in fixed-income fund certificates reached EGP 11.49 billion, traded shares on the Egyptian Exchange (EGX) accounted for EGP 4.46 billion, and EGP 7.49 billion was allocated to other investments.

Dr. Islam Azzam, FRA Chairman stated that these indicators confirm the growing economic importance of private insurance funds as key channels for pooling and deploying long-term savings. He emphasized their role in bolstering the financial stability of members and their families, as well as providing financing resources that are invested in debt instruments, banking sector and capital market.

FRA Chairman stressed the importance of continually strengthening supervisory mechanisms over these funds, enhancing their management and promoting governance and investment efficiency in accordance with the Unified Insurance Law No. 155 of 2024 and regulatory decisions issued by the Authority. This ensures a healthy balance between growing members’ funds and maintaining the capacity to fulfill due insurance benefits.

The publication of this report aligns with the Authority’s commitment to provide data and indicators related to non-banking financial activities, promoting transparency and raising awareness of their performance, thereby supporting market evaluation, facilitating market growth and maximizing their contribution to the national economy.

FRA Chairman Extends Condolences over Western Assiut Road Accident, Orders Fast-Track Compensation – Tuesday 20 October 2026

Dr. Islam Azzam, FRA Chairman has expressed his condolences to victims’ families of the tragic traffic accident that occurred today within Faiyum Governorate, involving a collision between a passenger bus and a heavy transport truck. The initial death toll stands at 13 fatalities, with over 34 others injured. Dr. Azzam prayed to Almighty God to bestow His infinite mercy upon the deceased, grant their families patience and solace and wish all the injured a swift and complete recovery.

In light of his follow-up on the aftermath of the accident, Dr.  Islam Azzam ordered the Egyptian Compulsory Insurance Pool (ECIP) to initiate all necessary procedures to pay out the due compensation to the victims’ families and the injured in accordance with the Unified Insurance Law No. 155 of 2024.

FRA Chairman further directed prompt communication with the families of the deceased and the injured to facilitate procedures and accelerate the disbursement of compensations. These amounts stand at EGP 100,000 per fatality. Meanwhile, injury payouts will be determined based on the disability percentage certified by the Medical Commission, in accordance with the Unified Insurance Law. Settlements will be fast-tracked for eligible beneficiaries upon the receipt of completed accident documentation and verification of the compulsory insurance policy’s validity.

For his part, the Executive Director of the Egyptian Compulsory Insurance Pool confirmed that Pool representatives will directly reach out to the victims’ families to finalize the required paperwork and expedite compensation payouts as quickly as possible.