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Tue 1 May 2007 12:00 AM

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Technology could spur local bourse mergers

Market solutions enable the region’s exchanges to consider the possible benefits of closer cooperation.

Trading volumes on Middle East exchanges, particularly those in the GCC, may not be at their height at the moment, but many bourses are taking the opportunity to carry out reforms while business is relatively quiet.

Some have demonstrated a tougher line on regulation this year, with an increased focus on ensuring transparency from members, but technology is also a critical factor in simplifying the process from trading to clearing. Industry experts at the World Exchange Congress, held in Dubai recently, emphasised the role that technology is playing in improving transparency, efficiency and capacity for the region's exchanges.

Atos Euronext Market Solutions (AEMS) has been increasing its local presence, counting the Amman Securities Exchange, DIFX and the Muscat Securities Market among its clients, and opened its Dubai office last month.

Misr for Central Clearing, Depository & Registry (MCDR), the sole Egyptian Central Securities Depository, is working with AEMS to provide an electronic back office and online trading system to brokers on the Cairo and Alexandria Stock Exchange (CASE).

Ken Tregidgo, head of strategy and business development at AEMS, explained: "It will have autocapture and execution, all the way through to back office processing."

Amid calls from many industry observers for the consolidation of some of the Middle East securities exchanges, AEMS has been working with groups of exchanges in the region to try to increase the amount of interaction between them.

John Oddie, global head of exchange business unit and executive vice president, AEMS, said that several markets in Europe had experienced greater success after joining forces.

"All of the markets grew substantially as a result," he said.

"If exchanges were to bond together, there would be a lot of benefits in efficiency and cross-marketing advantages."

Oddie added: "The same cross-clearing platform would allow cross-margins. That could improve leverage. For derivatives markets, and for international investors, that would be a very big advantage."

Meanwhile, OMX is involved in a project to enhance the technology behind the Saudi Stock Exchange.

"It will be going live soon," said James Martin, vice president EMEA, OMX Group. "We are upgrading the infrastructure, replacing the trading system and the market data system."

The project involves more than just installing new technology.

"We are educating the market not just on our system, but on how to prepare themselves and make the market more stable," Martin said.

"We are educating the existing Tadawul staff and the new staff they are bringing on board."

OMX will also be implementing its new Extreme system at Dubai Financial Market, and will be upgrading the platforms behind CASE and the Iraq Stock Exchange. "We are looking to help them increase liquidity and foreign investment, while still maintaining their national identities," Martin added.

If technology provides a way for exchanges to do that, then it may not be too long before the region sees more cooperation between markets - and perhaps even mergers.

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