Financial Authority releases short selling template
The General Authority for Financial Control has issued a guidance model for "short selling" transactions. This mechanism involves borrowing securities with the aim of selling them to profit from anticipated declines in stock prices. The model's purpose is to organize the relationship between brokerage firms and borrowing clients, defining each party's rights and obligations, including collateral management, periodic valuation of securities, and procedures for end of loan periods or market changes. Additionally, the model requires the submission of margin guarantees according to specified ratios, supervision by firms over buy and sell operations, and grants clients the right to close positions or issue sell orders. The mechanism aims to generate profits from price differences while protecting the rights of all parties involved. It also seeks to promote transparency through a centralized lending system managed by the Egyptian Clearing House, ensuring that all operations are linked to a precise regulatory framework.
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