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Sun 26 Dec 2010 12:33 PM

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Dubai's DFM unveils new steps to boost liquidity

DFM says new index rules to boost liquidity; unified price band set for all listed stocks

Dubai's DFM unveils new steps to boost liquidity
BOURSE TRACK: Dubai Financial Market, the only Gulf Arab stock market to sell shares to the public (Getty Images)

Bourse operator Dubai Financial Market (DFM) will cut the weight of single
stocks in the index and adopt a unified price band as part of fresh steps to
boost liquidity and better mirror market activity.

DFM, the Arab world's only publicly listed exchange, said in a statement on
Sunday that the maximum weight of a single stock will be lowered to 20 percent
from 25 percent currently and it will also limit the percentage of free float
shares at 20 percent of the less traded stocks.

The bourse will remove the current 5 percent up and down limit for
non-active stocks, like lender Emirates NBD and investment bank Shuaa Capital,
to enhance trading activity.

Effective January 2, 2011, all listed securities in the bourse will be
grouped under one category and trade at a 15 percent upside limit and 10
percent downside limit for a single trading session.

Builder Emaar Properties holds a 20 percent weightage in the index and is
the most actively traded stock in the index, while Dubai Islamic Bank has a
12.6 percent weightage according to the bourse.

In September, DFM said it will switch to a "delivery versus
payment" (DVP) system by the first-quarter of 2011, in a bid to get
emerging market status from index compiler MSCI.

Last year, DFM bought Nasdaq OMX's one-third stake in sister bourse, Nasdaq
Dubai, with the two markets switching to a single trading platform and
synchronised opening hours in a bid to bolster declining turnover.

Dubai's index DFM is down about 9.6 percent so far this year and slumping
volumes in the emirate has forced many brokerages to close operations amid
slumping revenues.

 

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