Dubai Issues Securities Lending and Borrowing Rules

Dubai Financial Market (DFM), which operates the secondary market for trading of securities, has issued the Securities Lending and Borrowing rules (SLB), as part of the exchanges constant efforts to enhance market infrastructure as per international best practices.
By Janet Du Chenne(59204)
Dubai Financial Market (DFM), which operates the secondary market for trading of securities, has issued the Securities Lending and Borrowing rules (SLB), as part of the exchanges constant efforts to enhance market infrastructure as per international best practices.

The operational implementation of the SLB rules is targeted by the first quarter of 2014 and contingent on the readiness of market participants.

As per the DFM SLB model, foreign securities lenders and borrowers may arrange loans based on international practices but will have to instruct local approved lending and borrowing agents to move loaned securities, whereas local lending and borrowing business will be undertaken by approved lending and borrowing agents which can either be local brokers, local custodians or any entities as may be approved by the Securities and Commodities Authority (SCA). In the initial phase, securities lending and borrowing activities will be limited for market making activities and for settlement of failed securities delivery for DVP trades.

Commenting on this development, Maryam Fekri, executive vice President and chief operation officer (COO) head of Clearing, Settlement and Depository, DFM said: “Over the past years, DFM has taken numerous initiatives and implemented various market enhancements. Certainly, these developments were highly recognized by local and international investors alike and played a pivotal role in the UAE market classification as “Emerging Markets” status by MSCI as well as S&P Dow Jones amongst other international index companies which reflect international investors’ confidence in our markets and their satisfaction with what we have accomplished.”

“The implementation of Securities Lending and Borrowing (SLB) is an important development for the market because SLB is a key market infrastructure for the development of other market products like ETFs thereby diversifying the range of products to be offered and increasing the UAE’s attractiveness for investments.” Maryam Fekri added.

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