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Egypt FRA expands fund regulations and short selling

Updated 3 times since CLSTR started tracking revisions of this situation.

What changed

2026-08-26 11:50 UTC → 2026-09-13 14:12 UTC · added removed

Egypt’s Financial Regulatory Authority (FRA) has introduced several measures to regulate and expand investment fund structures and capital market tools. In early August, the FRA issued its first decision to regulate hedge funds, permitting them to invest in equities, debt instruments, and financial derivatives such as futures and options. The regulation also allows for short selling on the Egyptian Exchange. FRA Chairman Islam Azzam stated these moves are intended to “deepen the Egyptian market, enhance investment flexibility, and stimulate the derivatives market” by attracting local and foreign investors. To ensure transparency, the regulation mandates strict disclosure regarding leverage limits, risk management, liquidity risks, and periodic stress test results. Following this, the FRA amended rules for real estate development companies transitioning into real estate investment funds. The updated requirements simplify net equity standards, requiring companies to maintain at least 500 million Egyptian pounds based on approved financial statements, excluding asset revaluation differences. The amendment also stipulates that recorded loans must not exceed the maximum borrowing ratio permitted under the Capital Market Law. In late August, the Egyptian Exchange (EGX) and August 2026, the FRA prepared issued Decision No. 155 to implement formally govern short selling mechanisms within weeks. operations. This follows the completion of regulatory frameworks and technical preparations by brokerage firms. EGX Chairman Omar Radwan noted that brokerage firms are currently upgrading systems and conducting pilot tests to enhance market depth and liquidity. To support this, framework establishes a central lending system is being developed to ensure connectivity between ‘Central Lending System’ managed by Misr Clearance, the exchange, brokerage firms, for Central Clearing, Depository and custodians, Registry (MCDR), allowing short sellers to view available lending offers to ensure transparency in accordance quantities, rates, and periods. FRA Chairman Islam Azzam noted the regulation seeks to “balance market encouragement with international best practices. strict risk control and market stability.” In September 2026, the FRA met with the European Bank for Reconstruction and Development (EBRD) to discuss boosting the non-banking sector. Discussions included the implementation of Basel III principles for risk management and the potential application of Solvency II standards for the insurance sector. The FRA is also prioritizing a ‘Market Maker’ mechanism to increase liquidity and stability.

Versions

  1. 2026-09-13 14:12 UTC Egypt FRA expands fund regulations and short selling
  2. 2026-08-26 11:50 UTC Egypt FRA expands fund regulations and short selling
  3. 2026-08-19 14:59 UTC Egypt FRA expands fund regulations and short selling
  4. 2026-08-15 12:37 UTC Egypt Financial Regulatory Authority fund regulations

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