1. Mohamed Abdel Salam Chairman of MCDR Company AMEDA 1 st Leadership Forum April 27- 29, 2009 in Alexandria 1 Introduction to Short Selling

2. Short Selling 2 A New Leveraged Vehicle for Securities Trading being Introduced in Egypt. Definition of the system: The “Securities Lending System” is a fund holding balances of securities listed on the Stock Exchange and owned by an investor (lender) desiring to lend them, and an investor (borrower) desiring to borrow for sell.

3. Why Introduce Short Selling? 3 Creates a “better” marketplace More liquidity and smaller spreads Good for Customers Opportunity to profit when prices decline Increased trading activity Leverage Flexibility Interest income for Lenders Good for Custodians and Brokers More activity = more commissions and fees Traditionally, interest income – Customer cash deposits (for brokers) Customer lending – (for custodians)

4. Important definitions Borrowing Customer: is the Seller Customer in the operation subject-matter of lending against a securities borrowing contract. Borrower’s broker: the brokerage company authorized to practice the custodian activity which has executed, in its capacity as proxy of the Seller Customer in the transaction, the operation of selling borrowed securities. The Company: Misr for Central Clearing, Depository and Registry Company Lender: The investor owner of the securities registered under the loaning system. 4

5. Advantages of Short Selling Doubling the selling volume. ( Borrowed securities ) Increase the revenues (selling the borrowed securities ) Interest income for Lenders All the rights and dividends reserved for the lenders Flexibility in redemption 5

6. Calculation of the amount of cash collateral shall be on the basis that the total cash collateral equals 125% of the market value of the borrowed securities as per the closing quotation on the settlement day Cash Collateral 6

7. Recording & Sending Lending order Contracting & Creating the lending pool The lending file xx Waiting list xx Short Selling xx MCDR Company lending order Creating the pool INVESTOR Custodian Broker Sign agreement Sign agreement 7

8. Creating the waiting list of the lenders Custodian B roker 1 3 Lending system MCDR Reaching the Max quantity of Lending sec. Adding to the Main lending list Adding to the waiting list Yes No Recording & Sending Lending order lending order Sign agreement Sign agreement INVESTOR 2 8

9. Shot Sell Pool Use the Pro-rata system to let lenders participate in every borrow transaction First in - First serve Waiting List 9

10. The Borrowing stage Broker L & B system Lending list Borrower list Blocking Order of the Borrowing quant. Quantity approved a sell order sent MCDR Stock Exchange 1 2 3 4 Balance is not enough& Blocking was cancelled Borrowing order + Collateral 10

11. Book Keeper Redemption of Borrowed Shares MCDR 2 3 Broker bank Cash collateral 1 redemption o r der Transfer Quantity Borrowed Broker L & B system Lending list Borrower list 11

12. Selected Securities 12 Same securities for Intra day trading and short selling Liquid securities Securities selected from EGX active list. Approved by CMA

13. -10% of the issued shares can be put in the pool from each company. - 5% the maximum the lender can put in the pool. - 2% the maximum the borrower can borrow from the pool. - 5% the maximum the broker can borrow to his clients from the pool. The percentages used in the short sell system 13

14. Who will compensate the Lenders with the rights given by the Issued companies ? New Buyers Issuers Company The names of the new buyers will appear in the issuer books to give them the rights Lenders Borrower The borrowers are the one who will compensate the lenders by the equivalent value of the rights 14

15. How MCDR will generate revenues to the lenders ? Borrower Bank Lenders Collect collateral versus the borrowed shares for 125% Invest the collateral A revenues are generated 30% 70% Divide the revenues 15

16. Thank You Website : www.mcdr.com.egwww.mcdr.com.eg 16