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Tuesday, 4 December 2018

Egyptian Exchange to roll out short-selling in first quarter of 2019

REGULATION WATCH- The EGX is looking to roll out short-selling as early as 1Q2019, EGX boss Mohamed Farid is quoted as saying by Youm7. Separately, regulations allowing brokerage firms to act as market makers will be announced in a few days, Farid added. Both tools are part of a four-year strategy to develop Egypt’s non-banking financial sector.

Background: Shorting will allow clients to borrow shares from their brokers for a small fee, then sell them right away, hoping that the price of the security will drop before buying it back. Regulations on shorts are expected this month. Only select brokerages will be allowed to short selling, and the rules will impose limits on the number of shares a short-seller can borrow for position. They will also specify a cash deposit worth 50% of the securities they’re borrowing.

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