NASDAQ Dubai today announced that Dubai Financial Services Authority (DFSA) has given final approval for all trading of its listed equities to take place through the trading platform of Dubai Financial Market (DFM), starting on Sunday 11 July, 2010.
The move is part of an outsourcing strategy to increase trading volumes on NASDAQ Dubai and strengthen Dubai’s role as a centre of capital markets activity. At the same time, clearing, settlement and custody functions for NASDAQ Dubai equities will also migrate to DFM’s systems.
Welcoming DFSA’s decision, Jeff Singer, Chief Executive of NASDAQ Dubai, said: “Working closely with DFSA and our market participants, we have met a challenging timetable for the outsourcing. The new structure will provide DFM’s 520,000 individual investors with easier access to NASDAQ Dubai equities. It will also provide institutional investors, including those based overseas, with the same easy access that they currently enjoy.”
A spokesperson for DP World, the most heavily traded company listed on NASDAQ Dubai, said: “We are delighted that NASDAQ Dubai and DFM are taking active measures to increase regional investor access to trading shares listed on NASDAQ Dubai and improve liquidity. We look forward to working alongside Nasdaq Dubai to attract greater liquidity from the regional markets. We will work with NASDAQ Dubai to ensure fungibility with our planned dual listing."
A number of NASDAQ Dubai secondary share listings have full fungibilty with their listings on other international exchanges. These arrangements will remain in place after the outsourcing. NASDAQ Dubai is ready to work with all its listed companies to put in place fungibility arrangements that would potentially generate and facilitate greater liquidity.
In May 2010 DFM became the majority owner of NASDAQ Dubai through an acquisition of shares from Borse Dubai and NASDAQ OMX, the international exchange group.
NASDAQ Dubai remains a separate company regulated by the DFSA, the financial services regulator inside the Dubai International Financial Centre (DIFC). It retains its own legal framework, listing rules and Members.
Under the outsourcing, NASDAQ Dubai’s equities will remain listed on NASDAQ Dubai and will not be listed on DFM. Trading of equity derivatives will continue to take place on NASDAQ Dubai’s own trading platform and systems.
Outsourcing details
NASDAQ Dubai is making changes to its market model in order to facilitate the successful outsourcing of its trading, settlement, clearing and custody functions for equities to DFM systems. Some of these changes are reflected in amendments to NASDAQ Dubai’s Business Rules while others consist of revised operating procedures. All will become effective on 11 July, 2010.
Key changes include:
Trading times:
Opening hours will be from 10am to 2pm UAE time (6am to 10am GMT) Sunday –Thursday. These are also DFM’s opening hours. Currently, NASDAQ Dubai’s trading hours are 10am to 5pm UAE time (6am to 1pm GMT) Sunday -Thursday.
Trading fees:
NASDAQ Dubai is cutting the fees it charges brokers for trading, including reducing the minimum fee from $10 to $8. It is also abolishing its custody fee.
Access by investors:
Institutional investors may continue to trade NASDAQ Dubai equities through NASDAQ Dubai brokers in exactly the same way that they do now, including through an omnibus account. They do not need to take any action to keep trading. However those who possess, or obtain, a DFM Investor Number (NIN) may use that NIN to facilitate trading the equities of both exchanges if they wish.
NASDAQ Dubai is encouraging individual investors who use UAE brokers to obtain a NIN to facilitate their trading, if they do not already have one.
Access by brokers:
NASDAQ Dubai Members may connect directly to the DFM X-Stream trading platform and many have chosen to do so. NASDAQ Dubai Members may also trade through NASDAQ Dubai’s Market Place Services function, or through another NASDAQ Dubai Member.
Margining:
NASDAQ Dubai will accept bank guarantees as margining under the outsourcing. A Member may match buy trades up to the value of its settlement cap.
Pre-validation:
All sell orders must be prevalidated, such that the trading system ensures that the securities to be sold are held in the relevant trading or custody accounts.
Settlement cycle:
Trades will move from a T+3 to a T+2 settlement cycle, which is the DFM settlement cycle. The trading and settlement cycle has been revised accordingly, including market holidays.
Settlement banks:
Emirates NBD became an approved Settlement Bank of NASDAQ Dubai for equities in June 2010, in time for the outsourcing. Standard Chartered and HSBC are also approved Settlement Banks.
Closing price:
This will be the last traded price during a business day. If there is none, it will be the previous day’s closing price.
Trading safeguards:
The reference safeguard will be 10% higher or 10% lower than the previous closing price, where the previous closing price is higher than or equal to $0.50.
Short selling:
Covered short selling of NASDAQ Dubai equities will continue to be permitted. The exchange has extended its short sale reporting requirement for another six months, to 1 January 2011.
