Dubai bourse's new rules aimed at emerging mkt tag- CEO

Dubai bourse’s new rules aimed at emerging mkt tag- CEO

The DFM is working with the UAE regulator, the Securities and Commodities Authority (SCA), as well as the Abu Dhabi Securities Exchange (ADX) to bring in the new rules.

September 30, 2010 9:08 by Reuters

Bourse operator Dubai Financial Market will switch to a “delivery versus payment” (DVP) system by the first-quarter of 2011, in a bid by the United Arab Emirates to get emerging market status from index compiler MSCI.

The DFM is working with the UAE regulator, the Securities and Commodities Authority (SCA), as well as the Abu Dhabi Securities Exchange (ADX) to bring in the new rules, Essa Kazim, DFM’s chief executive, told Reuters on Wednesday.

“We are aiming for the first quarter of 2011, but if things go very smoothly it could be sooner than that,” said Kazim.

“This system will be in line with G30 recommendations and was one of the issues raised by MSCI.”

In June, MSCI Inc, kept the UAE and Qatar stock markets as frontier markets in its 2010 annual market classification review, dashing market hopes for an upgrade to emerging market status.

“If the UAE is included as an emerging market in the next revision by MSCI it will definitely bring a new flow of funds into the market, especially from institutions that invest based on this index,” said Kazim.

The DFM’s T+2 trading regime, by which share transactions must be completed within two days of a market trade, will remain, but delivery versus payment means share ownership will not be transferred to the buyer until they have paid for the acquisition.

Consequently, payment and ownership transfer is near-simultaneous, whereas at present delivery of securities is not related to payment.

Earlier in the month, the UAE was classified as an emerging market for the first time by index provider FTSE Group.

Nasdaq Dubai, which uses the same trading platform as the DFM, will also switch to the DVP system, Kazim added.

(Reporting by Matt Smith; Editing by Dinesh Nair and Louise Heavens)