DUBAI Dec 26 Abu Dhabi's stock market plans to
introduce covered short-selling in the first quarter of 2017,
its chief executive said on Monday, as it seeks to boost
liquidity and attract more foreign investors.
In covered short-selling, investors borrow shares and sell
them in the expectation of repurchasing them later at a lower
Regulators in the Gulf have until now shied away from
allowing the practice because of concern that it could
destabilise markets, though some countries including Saudi
Arabia and Qatar have said they plan to introduce it.
The Abu Dhabi Securities Exchange (ADX) said on Monday it
had held meetings with brokerages in Abu Dhabi and Dubai ahead
of the launch of a short-selling service.
ADX chief executive Abdullah al-Blooshi told Reuters the
exchange was acting after the United Arab Emirates market
regulator, the Securities and Commodities Authority, approved
rules on short-selling.
Dubai Financial Market, the UAE's other big
exchange, did not respond to an emailed request to comment on
whether it too might eventually launch short-selling.
Blooshi said the ADX aimed "to diversify investment
instruments in order to increase the level of liquidity to match
global markets. This will enable us to attract foreign investors
accustomed to these instruments".
ADX's short-selling service will be open to investors with
margin trading accounts, investment funds, institutional
investors, custodian clients and market makers, said Blooshi,
noting that the "door will be open" to other investors if they
obtain approval from the exchange.
In a statement, the ADX described several rules to reduce
risks surrounding short-selling. For example, the price of a
stock sold short must be higher than the last deal price
involving the stock, while brokers' clients will have to provide
guarantees when selling short.
(Editing by Andrew Torchia)