Dubai Financial Market launches short selling
18 December 2017 Abu Dhabi
Image: Shutterstock
Dubai Financial Market (DFM) has launched a regulated short selling service (RSS) after it was given approval by the Securities and Commodities Authority.
Investors will now be allowed to sell stocks that are not theirs to gain surplus if prices have dropped when trades are settled.
Every six months a list of potential DFM-listed securities will be reviewed in compliance with international recommendations — the list will also include exchange traded funds.
Seven brokerage firms applied for a licence to provide RSS to their customers after the service passed regulatory, technical and procedural rules for short selling.
The brokerage firms will be given approval when and if they pass technical testing.
DFM chairman Essa Kazim said: “As part of DFM’s strategy to diversify its products and services, we are delighted to announce the completion of our preparations to introduce this significant tool to our market participants in a step aimed at increasing their capabilities and helping them to strengthen their trading activity and further enhance trading liquidity.”
He added: “We have carefully designed this new service to give investors the opportunity to short listed securities while safeguarding the market from any unsolicited repercussions on the market.”
DFM’s announcement comes just a few weeks after Al Ramz Capital, a United Arab Emirates investment manager, became one of the first firms in the region to be granted a short selling licence from Abu Dhabi Securities Exchange (ADX).
By allowing firms like Al Ramz Capital to obtain a a short selling licence, ADX looks to raise market turnover and attract more foreign investor participation across the Middle East region.
Investors will now be allowed to sell stocks that are not theirs to gain surplus if prices have dropped when trades are settled.
Every six months a list of potential DFM-listed securities will be reviewed in compliance with international recommendations — the list will also include exchange traded funds.
Seven brokerage firms applied for a licence to provide RSS to their customers after the service passed regulatory, technical and procedural rules for short selling.
The brokerage firms will be given approval when and if they pass technical testing.
DFM chairman Essa Kazim said: “As part of DFM’s strategy to diversify its products and services, we are delighted to announce the completion of our preparations to introduce this significant tool to our market participants in a step aimed at increasing their capabilities and helping them to strengthen their trading activity and further enhance trading liquidity.”
He added: “We have carefully designed this new service to give investors the opportunity to short listed securities while safeguarding the market from any unsolicited repercussions on the market.”
DFM’s announcement comes just a few weeks after Al Ramz Capital, a United Arab Emirates investment manager, became one of the first firms in the region to be granted a short selling licence from Abu Dhabi Securities Exchange (ADX).
By allowing firms like Al Ramz Capital to obtain a a short selling licence, ADX looks to raise market turnover and attract more foreign investor participation across the Middle East region.
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