Dubai Financial Market (DFM) launched the Regulated Short Selling (RSS) Service after completion of all regulatory, technical and procedural preparations.
Short selling will allow market participants to strengthen their trading activities, better utilize their resources, and further enhance market liquidity. With the Regulated Short Selling, investors can short securities listed on DFM through selling borrowed shares with a commitment to return to the lender based on the mutually signed agreement. Seven brokerage firms have already applied for license to provide the new service to their customers.
The RSS will be available on a selected list of eligible DFM-listed securities that will be reviewed every six months in accordance with international recommendations, including all ETFs and many securities listed in UAE indices.
To implement RSS, brokers have to ensure that the borrowed securities are located on the client’s account prior to placing a short selling order, with exception of DvP clients, as a lending confirmation is sufficient to proceed with the order. The RSS complements the Securities Lending and Borrowing activity whereby approved lenders can lend securities to approved borrowers for settlement of RSS trades.
The DFM has successfully completed extensive preparation stage over the past few months that included the consultations with market participants on the operating model and the necessary technical enhancements in order to ensure the full readiness of DFM’s systems and regulation.
Essa Kazim, Chairman of Dubai Financial Market, 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. Over the past few months, we have implemented wide-ranging enhancements for the systems and regulations to ensure full readiness for such significant development in accordance with international best practices and in coordination with market participants. 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.”