UAE Central Bank Says To Study Margin Lending In Stock Market

The United Arab Emirates central bank discussed margin lending at a board meeting this week and ordered that all aspects of the issue be studied, the central bank said on Wednesday.

In a brief statement describing discussions at the board meeting, the central bank did not elaborate on how the study would be conducted or what action might be taken in response.

The Dubai stock index has swung wildly this year, soaring as much as 60 per cent and then giving up all those gains at one stage. Leveraged buying of stocks through margin trading at brokerages has sometimes fuelled speculative buying, fund managers believe.

Last week, the UAE’s Securities and Commodities Authority urged brokerages extending margin trading services to obey regulations and sell clients’ shares if shortages in their accounts were not filled on time.

Earlier this month, a central bank official said the bank was looking at proposals for new rules covering commercial bank lending against shares.