الهيئة العامة للرقابة المالية

• Program Goals: Designed to familiarize market participants with the new regulatory framework, technical requirements and rights and obligations of each party

Dr. Islam Azzam , FRA Chairman:

• This training is core to building capacity and technical readiness ahead of the short-selling rollout.
• Passing this program is mandatory for brokerage firms seeking a short-selling license.

Financial Regulatory Authority (FRA), chaired by Dr. Islam Azzam, has concluded its inaugural training program to prepare brokerage firms and financial institutions for the new regulatory and operational framework governing short selling (Securities Borrowing and Lending for short sales), issued under Board Resolution No. 155 of 2026.

Executed by the Financial Services Institute (FSI)— FRA training arm—and delivered by industry experts Hanan Hamdy and Amr El-Saoudi, the program drew more than 100 participants representing 42 brokerage firms and financial institutions, qualifying them to serve as designated compliance and execution officers for short-selling transactions.

Under the new regulatory decree, any brokerage firm seeking authorization to offer short selling must employ at least one designated short-selling compliance officer. Candidates must pass FRA-mandated examinations and training modules to gain comprehensive practical knowledge of the regulatory framework, clarify operational roles across market participants, and fulfill technical licensing requirements.

To achieve these objectives, the curriculum focused heavily on key execution mechanisms, collateral management, coverage ratio monitoring, mark-to-market settlements, closing open positions, returning borrowed securities and technical compliance controls.

The program delivered a detailed walkthrough of the new regulatory framework for short selling across 13 core pillars: the general framework of the mechanism, the new Central Lending System, operating conditions and controls, the rights and obligations of both brokerage firms and borrowing clients, and the role of Misr for Central Clearing, Depository and Registry (MCDR). It also covered securities lending and borrowing caps and ratios, role of custodians, securities availability and collateral management, closure of borrowing positions and return of securities. In addition to corporate actions and associated shareholder benefits, direct contracts between brokerages and lending or borrowing clients, technical and regulatory compliance requirements, and standard contract model between brokerages and borrowing clients recently issued under FRA Chairman Decree No. 3350 of 2026.

Commenting on the rollout, Dr. Islam Azzam, FRA Chairman noted that the training program marks a significant operational step toward launching short selling in the Egyptian market as the Authority completes regulatory guidelines and conducts live simulations to fine-tune the Central Lending System managed by MCDR. He emphasized that building staff capacity is not merely a licensing prerequisite for brokerage firms, but a foundational pillar of FRA’s broader awareness strategy to ensure a seamless market launch that achieves its intended economic impact on the capital market.

Ahead of the official rollout, FRA released a comprehensive video hosted by Dr. Islam Azzam across its official website, social media and YouTube channels. The video detailed the mechanics, obligations and risk profiles for lenders, borrowers, brokerages, MCDR, and custodians, while highlighting the real-time functionality of the new Central Lending System which enables borrowers to view live lending offers aligned with their investment strategies and allows lenders full visibility over registered market offers.

Additionally, the Authority published educational content clarifying the distinction between short selling and margin trading, emphasizing how combining both mechanisms enhances pricing efficiency and market liquidity on the Egyptian Exchange (EGX).

It is worth mentioning that short seller profits when a borrowed security’s price falls as anticipated, allowing the investor to repurchase shares at a lower price, lock in the profit margin minus borrowing costs, and return the securities to the lender. Conversely, if the security’s price rises, the short seller must repurchase the shares at a higher price to limit losses, incurring a financial loss plus borrowing fees upon returning the securities. In both scenarios, the lending investor receives a yield combining the risk-free rate and a lending premium, while retaining all shareholder privileges and corporate action benefits.