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Mon 8 Feb 2010 07:44 PM

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Nasdaq Dubai moves closer to DFM, alters hours

Trading times reduced while DFM to run operational functions of NASDAQ equities.

Nasdaq Dubai, one of two bourses in Dubai, is changing its opening hours to those of sister exchange, the Dubai Financial Market, in its latest attempt to boost trading, it said on Monday.

Nasdaq Dubai plans to reduce its trading hours to 0600 GMT to 1000 GMT, pending regulatory approval.

The operational functions of Nasdaq Dubai equities will be outsourced to the DFM, including trading, clearing, settlement and custody, it said.

In a statement, the bourse said: "These changes are designed to attract more liquidity from the retail investors who trade on Dubai Financial Market."

Nasdaq Dubai said there would be no change to the listing status nor the regulatory framework of Nasdaq Dubai equities.

The changes are subject to regulatory approval from the Dubai Financial Services Authority and would come into effect in he next few months, it said.

Dubai, a commercial and tourism hub trumpeted as the Singapore of the Middle East, set up Nasdaq Dubai, formerly the DIFX, in 2005 to encourage local companies to sell shares to the public and to help foreign investors tap regional wealth.

The DIFX was slated to become the bridge between the markets of London and Asia, but has failed to attract either sufficient liquidity or listings and has since changed approach to try and draw in local retail investors.

The exchange, where institutions dominate trading and were originally priced only in dollars, announced in 2009 a number of reforms to this end, including dual pricing and a switch to the Sunday to Thursday local working week.

The impact of these have also fallen short of expectations and today there are just 16 equity listings on the Nasdaq Dubai, only one of which - DP World - trades on a daily basis. The ports operator last month said it was eyeing a dual listing on the London Stock Exchange this year, saying it was not happy with the market valuation of the company.

In December, DFM bid $121 million for Nasdaq Dubai, with Nasdaq OMX to swap its 33 percent holding in Nasdaq Dubai for a 1 percent stake in the DFM.

The deal, which raised speculation the exchanges would be merged as Dubai looks to strengthen its position amid the financial crisis, has yet to be officially completed.

Matthew Wakeman, EFG-Hermes managing director for cash and equity linked trading, said: "There's no impact for the DFM, it's just a way to integrate the two together."

He added: "An actual merger is a long way off. They need to decide what they want to achieve with the two exchanges."

Government owned Borse Dubai owns the remaining 67 percent stake in Nasdaq Dubai as well as 80 percent of DFM. (Reuters)

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