Complex Made Simple

Dubai Financial Market planning to allow short-selling

* Move planned to increase trading liquidity

* Gulf regulators have shied away till now due to fears it will destabilise markets

* Bourse plans to introduce covered short-selling in Q1 2017


Dubai Financial Market (DFM) , the Gulf’s only listed stock exchange, said on Tuesday that it planned to introduce covered short-selling, a move that could increase trading liquidity.

“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,” it said in a statement to Reuters.


(Dubai Financial Market nine-month profit drops 29 per cent)


In the works

The exchange has completed consultations on the operating model and is now working on technical enhancements of its planned short-selling system, it said.

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

Regulators in the Gulf have until now shied away from the practice because of concern that it could destabilise markets, but some countries including Saudi Arabia and Qatar have said they plan to introduce it.

Abu Dhabi Securities Exchange Chief Executive Abdullah al-Blooshi said last week that the bourse would introduce covered short-selling in the first quarter of 2017.

He said the exchange was acting after the United Arab Emirates market regulator approved rules for the practice.