Dubai lays down the law
31 January 2014 Dubai
Image: Shutterstock
Dubai Financial Market has issued securities lending and borrowing rules, as part of the exchange’s efforts to enhance market infrastructure according to international best practices.
The operational implementation of the rules is expected to happen by Q1 2014, but is contingent on the readiness of market participants.
Under Dubai Financial Market’s securities lending and borrowing model, foreign securities lenders and borrowers may arrange loans based on international practices, but will have to instruct local approved lending and borrowing agents to move loaned securities.
Local lending and borrowing business will be undertaken by approved agents, which can either be local brokers, custodians or any entities as approved by the Securities and Commodities Authority.
In the initial phase, securities lending and borrowing activities will be limited for market making activities and for settlement of failed securities delivery for delivery-versus-payment trades.
Maryam Fekri, executive vice president and COO of Dubai Financial Market, said: “Over the past years, DFM has taken numerous initiatives and implemented various market enhancements. Certainly, these developments were highly recognised by local and international investors alike and played a pivotal role in the UAE market classification as ‘Emerging Markets’ status by MSCI as well as S&P Dow Jones amongst other international index companies, which reflect international investors’ confidence in our markets and their satisfaction with what we have accomplished.”
“The implementation of securities lending and borrowing (SLB) is an important development for the market because SLB is a key market infrastructure for the development of other market products like ETFs, thereby diversifying the range of products to be offered and increasing the UAE’s attractiveness for investments.”
The operational implementation of the rules is expected to happen by Q1 2014, but is contingent on the readiness of market participants.
Under Dubai Financial Market’s securities lending and borrowing model, foreign securities lenders and borrowers may arrange loans based on international practices, but will have to instruct local approved lending and borrowing agents to move loaned securities.
Local lending and borrowing business will be undertaken by approved agents, which can either be local brokers, custodians or any entities as approved by the Securities and Commodities Authority.
In the initial phase, securities lending and borrowing activities will be limited for market making activities and for settlement of failed securities delivery for delivery-versus-payment trades.
Maryam Fekri, executive vice president and COO of Dubai Financial Market, said: “Over the past years, DFM has taken numerous initiatives and implemented various market enhancements. Certainly, these developments were highly recognised by local and international investors alike and played a pivotal role in the UAE market classification as ‘Emerging Markets’ status by MSCI as well as S&P Dow Jones amongst other international index companies, which reflect international investors’ confidence in our markets and their satisfaction with what we have accomplished.”
“The implementation of securities lending and borrowing (SLB) is an important development for the market because SLB is a key market infrastructure for the development of other market products like ETFs, thereby diversifying the range of products to be offered and increasing the UAE’s attractiveness for investments.”
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