Dubai Financial Market updates the operational model for regulated short selling

The Dubai Financial Market announced updates to its operational model and regulated short selling procedures, to enhance transparency and efficiency in short selling transactions.

The Dubai Stock Exchange indicated in a statement today, Thursday, that this update includes changes in accounts, technical requirements, implementation guidelines, and eligibility criteria for securities, noting that investors can use several accounts to provide a mechanism for regulated short selling.

The accounts are a regulated short selling/lending securities trading account and assumed for delivery-for-payment investors.

Investors dealing with this system can use their existing accounts with the custodian of the Dubai Depository Company with whom they deal in order to conduct regulated short sale transactions and hold borrowed securities, or to create a separate account with the custodian of the Dubai Depository Company with whom they deal.

It also includes a regulated short selling/lending and borrowing trading account for non-delivery investors.

Non-delivery investors may use their existing trading account with a trading member for regulated short sale transactions, or they may open a separate account to conduct regulated short sale transactions.

The Dubai Financial Market noted in its statement that if an investor who deals with the delivery-for-payment system, or an investor who does not deal with the delivery-for-payment system, chooses to open a separate account to conduct regulated short sale transactions, then such accounts may only be used for the purposes of purchasing securities for the purpose of returning... Securities borrowed under a securities lending and borrowing transaction.

The purposes also include purchasing securities for the purpose of settling a structured short sale transaction in the event that the client decides not to carry out the relevant securities lending and borrowing transaction.

In such a case, the settlement of the regulated short sale transaction will only be successful if the purchase transaction and the inward transfer of the borrowed securities are settled on the settlement date of the regulated short sale transaction.