Bourse follows in footsteps of Abu Dhabi and Saudi Arabian markets
Dubai stock exchange launches regulated short selling to boost liquidity
The Dubai Financial Market (DFM), the only listed equity market in the Arabian Gulf, has started regulated short-selling, following in the footsteps of Abu Dhabi' bourse, as UAE exchanges step up efforts to boost liquidity and diversify their services to attract more investors.
Regulated short-selling - the practice of selling borrowed shares in the hope of buying them back later at a lower price - will apply to a limited number of listed securities, which will be reviewed every six months, the DFM said in a statement on Sunday. The DFM, which didn’t name the initial eligible stocks, said short-selling will also apply to exchange traded funds (ETFs) and other listed securities.
“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,” said Essa Kazim the chairman of the DFM.
The Abu Dhabi Securities Exchange launched in October a limited form of short-selling that it applied to 10 stocks. These include FAB, the country’s biggest lender, telecoms operator Etisalat, Abu Dhabi Commercial Bank and real-estate developer Aldar Properties.
Dubai and Abu Dhabi are following in the footsteps of the Saudi Arabian bourse, the Arab world’s largest, which launched short-selling in April as part of a suite of reforms aimed at garnering a spot on the much-tracked MSCI Emerging Market Index.