Dubai Financial Market launches short-selling service

Dubai Financial Market (DFM) has officially launched a short-selling service for stocks after completing the necessary regulatory and technical steps.

Under the system, investors can sell securities that are listed on the market that they do not own with the hope of repurchasing them later at a lower price.

Read: Dubai Financial Market planning to allow short-selling

The DFM said it hoped the new service would improve trading and enhance liquidity levels.

In order to practice short selling, “brokerages must ensure that there is a borrowed security in its client’s account before executing the short sale order, except for DVP customers where there is only a pledge or confirmation of securities lending,” according to the organisation.

Seven brokerages have applied for a new service licence so far and applications are being reviewed.

“As part of DIFC’s diversification strategy, the launch of this important service has been announced in a move aimed at enhancing the ability of investors to trade in the market, activate their trading and raise liquidity levels,” said DFM chairman Essa Kazim.

The DFM will review a list of approved securities for short selling every six months. The list will include all exchange-traded funds immediately listed and any listed companies on the emirate’s global indices.

The neighbouring Abu Dhabi Securities Exchange introduced technical short-selling in October.

Read: Abu Dhabi bourse starts technical short-selling to boost liquidity