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Wednesday, 5 September 2018

Short-selling coming at the end of the month?

REGULATION WATCH- Short-selling is coming at the end of September, Financial Regulatory Authority (FRA) deputy head Khaled El Nashar said yesterday, Al Mal reports. Negotiations are ongoing with various stakeholders to finetune the rules that will govern shorts, which El Nashar had previously said would be “strict,” ensuring that only brokerages with the balance sheet strength to offer short selling would be allowed to do so. The FRA committee drafting the regulations had completed its work last month ahead of the introduction of shorts in 3Q2018. In addition to placing limits on the number of shares a short-seller can borrow for a short position, the regulations also force borrowers to pay a cash security deposit equivalent to 50% of their borrowed stocks, officials had previously said.

Background: Short-selling was made possible through amendments to the executive regulations of the Capital Markets Act, which were approved in May and also opened the door to the issuance of sukuk and commodities and futures exchanges, as well as short-term bonds.

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