EGX executive chairman on short-selling, IPO pipeline, S&P review

We sat down with EGX boss Omar Radwan for a wide-ranging conversation about where the exchange stands, from the S&P Dow Jones Indices (S&P DJI) review to short-selling’s final countdown and a state IPO pipeline he says is closer to delivering than the headlines suggest. Radwan tells us the final system test for short-selling is underway, puts a number on the state listings pipeline for the first time — up to six of the 20 temporarily listed companies could complete full IPOs within the next year — and lays out the EGX’s case to S&P DJI ahead of a decision expected within months.

The S&P DJI consultation closed Friday, and Radwan says the EGX’s formal reply leaned heavily on the macro turnaround. Repatriation delays have eased, net foreign assets and reserves are at highs, and the EGX itself hit a record EGP 15.6 bn in daily trading volume — a figure Radwan cited as proof the market is headed for an upgrade, not a downgrade. He said the case went beyond the paperwork too — he personally spoke with representatives from 17 of the index’s member institutions in the run-up to the deadline.

REFRESHER- S&P DJI’s consultation on demoting Egypt from Emerging to Frontier status opened in June, with a deadline that slipped to 31 July from 17 July. If approved, the change wouldn’t take effect until the September 2027 index reconstitution — moving Egypt out of the same basket as Saudi Arabia, the UAE, and India and into Frontier alongside Morocco, Pakistan, and Vietnam. The stakes are more about optics than fund flows: Egypt is just 0.12% of S&P DJI’s Emerging BMI today but would jump to roughly 3.4% of the smaller Frontier BMI — nearly 29x its current weight.

On short-selling, the news is more immediate than the “before the end of August” timeline previously suggested. Radwan says the final system test — a regulatory requirement before it goes live — is happening “as we speak,” adding that “knowing what we know today, I think this is going to happen very soon.”

REMEMBER- The FRA first floated short-selling in 2019, licensing nine brokerages — including EFG Hermes, CI Capital, and Shuaa Securities — and promising trial runs, but the rollout never materialized.

Edited excerpts from our conversation:

Enterprise: How do you think S&P DJI will react to Egypt’s formal reply?

Omar Radwan: If you believe the TV surveys done on this — Al Arabiya, for one — 100% of the stakeholders surveyed said they don’t expect a downgrade. Beyond the survey responses, we’ve been talking to them directly. I spoke to 17 different members of that index myself, and the feedback was positive. But we have to wait and see. It’ll be announced within a couple of months. But actual implementation would be September 2027.

E: Short-selling was first promised some seven years ago; what’s mechanically different this time?

OR: We believe one of the main deterrents was the lack of incentives for asset owners to lend their shares. The mechanism here isn’t naked shorting — it’s lending or borrowing with the intent to sell. The new setup gives lenders real incentives, including a return on the shares they lend, managed through the central depository. Borrowers have full visibility into different lenders, including their terms, their rates over the reference rate, and how many shares they are offering, allowing them to pick whichever option best suits their needs. And the borrower can close the position anytime, paying interest only for the time they actually borrowed. It creates real, healthy competition, and a decent return for the lender.

E: EGX70 futures and options are supposed to be next in the derivatives rollout. Is there a date, or does it depend on single-stock picking up volumes first?

OR: Derivatives are different because we need to educate the market, including both the brokerages and the investors. Brokerage firms need to update their systems and client contracts, and that’s slowly happening. On the investor side, we are building financial literacy — how to use derivatives, the risks, and how to hedge properly. Mutual funds will be able to request a license for short-selling and derivatives through a simple process submitted to the FRA, which has said it will facilitate and encourage this. Eventually, it opens to corporate and retail investors too once they pass a questionnaire showing they understand the risks.

ICYMI- Our derivatives market is already live and growing, though trading volumes have been slow to build. Futures on the benchmark EGX30 index launched in March, followed by contracts on CIB and TMG in June, with more single-stock futures, EGX70 futures, and options set to follow.

E: Why doesn’t the EGX publish cumulative derivatives volume, and when will that change?

OR: We need the market to pick up a bit first. We publish as much as we can, but this market requires significant infrastructure to be put in place first, which is our current focus.

E: Of the 20 state-owned companies with temporary listings, how many do you expect to complete full IPOs in the next 12 months?

OR: Based on what we are told, it’s about five or six. But that decision belongs to the owners and the investment banks, not the exchange. We play our role by educating these temporarily listed companies on listing requirements, transitioning from single-entity government ownership to multi-entity and retail ownership, and establishing investor relations teams. We work through this process alongside lawyers, investment banks, and holding companies.

Meanwhile, the EGX is open for business for large corporate listings from both the private and public sectors. We met with the Finance and Investment Ministers today regarding new regulations: companies with over EGP 15 bn in market capitalization qualify for a 15% tax discount for three years, extendable, to help us compete for mega-listings and rebalance the index.

E: What’s the status on the GDR program and cross-listing more broadly?

OR: Egypt deserves a much more vibrant GDR program than the current one. We are acting as a mediator between the London Stock Exchange and local listed companies to highlight the benefits of GDR programs, and the LSE is very interested. We are also working with the Arab Federation of Capital Markets and African exchanges to facilitate stock cross-listing. Cross-listed companies become sort of ambassadors for Egyptian equities. We are looking at remote brokers too, letting brokerage entities operate from outside Egypt.

E: It was recently mentioned that names like Mopco, PMS, and Elab will trade in USD once on the EGX, and that they are considering a Saudi dual listing. Why Saudi specifically?

OR: As for Saudi Arabia, the petroleum sector there is particularly relevant. The Saudis are very interested, and we have been in talks with them. It may see the light of day very soon. Our list of interested partner exchanges is growing daily. Modern trading app integration and Egypt’s move toward full digital onboarding — including electronic onboarding for foreign investors with biometric passports — are major paradigm shifts. Investors globally will be able to onboard and sign binding contracts without leaving their offices.

E: You’ve floated the EGX itself becoming a joint-stock company. What would that actually change, and would the EGX list itself?

OR: Most exchanges internationally operate as corporate entities — it is the global norm, and it makes it easier for foreign stakeholders to interact with us the way they are used to interacting with others. A privately managed structure gives you the agility and simpler governance you need to move fast on new technology. There are details to work through, but the decision will be made carefully, and we will do whatever serves the market best.

IN CONTEXT- Saudi’s Tadawul took this path a few years back. The exchange converted into a joint-stock company and listed its own shares in a 2021 IPO, still trading today under the ticker TADAWULG. Abu Dhabi’s ADX also converted to a public joint-stock company structure in 2020, though its shares aren’t publicly listed.

E: You’ve got derivatives, short-selling, and the S&P consultation all in motion right now. Does a one-year term give you enough runway to actually see all of that through?

OR: It means I need to work very quickly.

SOUND SMART- Exchange chairman terms vary widely by market, but they typically surpass one year. For instance, Tadawul’s Mazen Al Romaihas was appointed to a four-year term; his predecessor, Sarah Al Suhaimi, held the chair for nearly a decade. Meanwhile, at the London Stock Exchange, board tenure averages just over five years.

E: A year from now, what is the one thing you would want to point to and say: that is what changed while I was here?

OR: My predecessors did a wonderful job opening doors, among them derivatives, short-selling, market-making, the digital-onboarding framework under Fintech Law No. 5 of 2020. Those started before me. What I want to own is pushing AI into real use here, not just talking about it. That is the legacy I am concentrating on. I envision AI being used in every part of the business: surveillance, disclosures, investor relations, day-to-day document handling. AI touches every industry, and we are no exception.