UAE revises SBL rules, launches short selling facility
13 October 2020 Abu Dhabi
Image: Jag_cz/Adobe.com
The United Arab Emirates’ stock exchange has amended its securities lending guidelines to facilitate the launch of a new covered short selling facility aimed at broadening the range of hedging mechanisms, increasing liquidity and trading volumes, and attracting new investors.
The Abu Dhabi Securities Exchange’s (ADX) has today released an updated set of guidelines that allows securities lending transactions to be executed more efficiently.
Among the main amendments is a requirement for the borrower to return the shares at the request of the lender at any time during the period, unless otherwise agreed.
The revised guidelines also pave the way for the launch of the country’s new covered short selling facility hosted by the exchange which comes after the Securities and Commodities Authority approved ADX’s short selling guidelines in 2012.
ADX says short selling will enhance the presence of long-term investment and limit speculation.
“One of the most important benefits is enhancing liquidity through increasing trading values since the lender of shares is usually a long-term investor who does not regularly trade,” the bourses states. “The process also increases investment awareness and transparency on the exchange.”
H.E. Mohamed Ali Al Shorafa Al Hammadi, chairman of ADX, says: “ADX is founded on an integrated legislative structure, to ensure that all relevant parties comply with covered short selling guidelines.
“This ensures a fair and secure trading environment in accordance with international best practice, making it more attractive to a broader range of investors. It is very important for us to have in place clear laws, rights and obligations to govern transactions both for brokers and investors, in order to give investors the opportunity to invest their savings in an advanced legal environment that is underpinned by fair and transparent disclosure regulations.”
The Abu Dhabi Securities Exchange’s (ADX) has today released an updated set of guidelines that allows securities lending transactions to be executed more efficiently.
Among the main amendments is a requirement for the borrower to return the shares at the request of the lender at any time during the period, unless otherwise agreed.
The revised guidelines also pave the way for the launch of the country’s new covered short selling facility hosted by the exchange which comes after the Securities and Commodities Authority approved ADX’s short selling guidelines in 2012.
ADX says short selling will enhance the presence of long-term investment and limit speculation.
“One of the most important benefits is enhancing liquidity through increasing trading values since the lender of shares is usually a long-term investor who does not regularly trade,” the bourses states. “The process also increases investment awareness and transparency on the exchange.”
H.E. Mohamed Ali Al Shorafa Al Hammadi, chairman of ADX, says: “ADX is founded on an integrated legislative structure, to ensure that all relevant parties comply with covered short selling guidelines.
“This ensures a fair and secure trading environment in accordance with international best practice, making it more attractive to a broader range of investors. It is very important for us to have in place clear laws, rights and obligations to govern transactions both for brokers and investors, in order to give investors the opportunity to invest their savings in an advanced legal environment that is underpinned by fair and transparent disclosure regulations.”
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