Arab Finance: The Financial Regulatory Authority (FRA) is conducting live tests of a central securities lending system ahead of the official launch of short selling, according to a statement. 

Technical teams from FRA, Misr for Central Clearing, Depository and Registry (MCDR) and the Egyptian Exchange (EGX) reviewed the latest developments in the operational infrastructure and electronic systems required to ensure real-time connectivity between MCDR and brokerage firms.

The system will allow borrowers or short sellers to view all available lending offers from lenders and select those that match their investment objectives. It will also enable lenders to examine other lending offers registered on the system.

Several brokerage firms licensed to conduct short-selling operations participated in the latest technical tests to ensure the mechanism operates smoothly and efficiently from launch.

The tests also aim to verify that the firms have established the necessary technological infrastructure, connected their systems to the central lending platform, and enabled clients to monitor transactions in real time.

Islam Azzam, FRA Chairman, said the central lending system, developed and operated by MCDR, will maintain records of securities available for lending under new rules designed to ensure transparency, sound governance, and the protection of all parties' rights in line with international best practices and under the FRA's full supervision.

Azzam added that the live tests aim to enhance transparency and allow both borrowers and lenders to monitor transactions in real time.

In August, the FRA issued a new regulatory framework for short selling, requiring investors to provide cash collateral equal to at least 50% of the market value of the borrowed securities before executing a transaction.