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Wednesday, 22 May 2019

Egypt’s Misr Clearing to provide short selling platform

REGULATION WATCH- Regulator to give Misr Clearing key role in short selling: Misr for Central Clearing, Depository & Registry (MCDR) will provide a platform for traders and brokerage firms to use for short selling under changes to recently-issued short selling regulations, Egyptian Capital Markets Associations (ECMA) Chairman Mohamed Maher said. The service will allow brokers and traders to quickly locate shares open for short positions. Officials from the Financial Regulatory Authority are set to meet with MCDR executives soon to discuss the platform, sources familiar with the matter told the press.

The changes will also provide contract templates for brokerages to use when entering into agreements with short sellers. The contracts will only involve the brokerage firm and the short seller, leaving out the lender to simplify the process.

Background: The FRA issued earlier this year regulations for short selling on the EGX, allowing brokerage firms to act as market makers by finding lenders and borrowers of stocks. Investors will only be able to short 20% of a company’s freefloat shares under the regulations, and any one shareholder won’t be able to lend more than 5% of a company’s shares. The EGX published the criteria for selecting securities eligible for short selling shortly after the regulations were issued.

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