DFM mulls introducing regulated short-selling

04 January 2017

The exchange could allow the covered short-selling trades in coming months

Dubai Financial Market (DFM) plans to introduce covered or regulated short-selling (RSS) in a bid to boost trading activity on the region’s only listed bourse

“DFM is planning implementation of regulated short-selling on a selected list of eligible securities in accordance with international recommendations under local market conditions in the coming months, subject to regulatory approvals of its rules,” a DFM spokesman said in a statement to MEED.

Covered short-selling involves investors borrowing shares and selling them in the hope of repurchasing them later at a lower price.

“Before placing an RSS order, an approved investor must have a borrow locate confirmation in place. RSS complements the securities lending and borrowing activity whereby approved lenders can lend securities to approved borrowers for settlement of RSS trades,” according to the DFM statement.

The exchange has completed its consultation on its operational model and is completing technical elements to identify short-selling trades and settle any remote events of non-delivery of securities, the statement added.

Media reports last week cited Abu Dhabi Securities Exchange chief executive Rashed al-Blooshi as saying that the bourse would introduce covered short-selling in the first quarter of 2017.

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