Abu Dhabi Securities Exchange (ADX) announced that it has proceeded with the implementation of the enhancements to its Delivery Versus Payment (DvP) model with the Buyer Cash Compensation (BCC) on Sunday the 5th of May. The improvement is a key factor in achieving emerging market status as donned by MSCI.
ADX has already changed its operational procedures for Delivery versus Payment (DVP) in 2011. The enhancement permits local custodian to reject buy and/or sell trades for settlement where it has not received settlement confirmation from its client or there is a mismatch in the settlement confirmation
The new BCC procedure-a part of the DvP model- which took effect on the 5th of May, means that a buying investor will be paid cash compensation in the event of securities being unavailable for delivery to the buying investor on settlement date.
ADX has already briefed its market participants to explain the many aspects of applying the new procedure. With the implementation of the BCC, ADX not only seeks to reinforce the current DVP model but also to adhere with international standards for financial markets infrastructure.
On the DvP enhancements, Mr. Rashed Al Baloushi, CEO of ADX said "Abu Dhabi Securities Exchange applied the mechanism as part of it plan of an integrated performance strategy based on the application of best standards of practice applicable in developed markets globally in line with an ideal investment environment to facilitate attracting foreign investment".