Wednesday, 3 July 2019

Short selling expected to be activated in 3Q2019

REGULATION WATCH- Expect short selling to begin in 3Q2019: Traders should begin short selling in 3Q2019, when the new system is implemented, Financial Regulatory Authority (FRA) deputy head Khaled El Nashar told Reuters on Tuesday. “The only thing still to be finalised is the implementation mechanism, and this is under discussion between the company Misr for Central Clearing and the stock exchange,” he said. The FRA began issuing licenses for brokerages to become short sellers last month, with Arqaam, EFG Hermes, CI Capital and the Arab African International Securities all receiving licenses.

Background: The market regulator issued regulations last February for short selling on the EGX, allowing brokerage firms to act as market makers by finding lenders and borrowers of stocks. Investors looking to open a short position will need to put down 50% of the value of the securities borrowed, and brokerages will be required to park 20% in fixed-income instruments while the position is open. The EGX published last month a list of stocks approved for short selling.

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