UAE bourses give more time for new settlement system

Gulf state aims to bolsters chances of earning coveted emerging market status from index complier MSCI
UAE bourses give more time for new settlement system
DVP SWITCH: UAEs bourses have given brokers and custodians until May 29 to switch to a new settlement system as the Gulf state seeks emerging market status from index complier MSCI
By Reuters
Thu 28 Apr 2011 11:19 AM

UAE's bourses

have given brokers and custodians until May 29 to switch to a

new settlement system as the Gulf state seeks emerging market

status from index complier MSCI.

The Dubai Financial Market and Abu Dhabi

Securities Exchange plan to adopt a delivery versus

payment (DvP) system, which is the global standard, on April 28,

a key step in bolstering the country's chances of earning the

coveted MSCI market status.

But market participants, including brokers and custodians,

have been given more time to implement the process after a few

concerns emerged, Abu Dhabi Securities Exchange said.

"We have received a few concerns regarding the readiness

level of the market participants. Therefore, we hereby kindly

ask custodians and brokers to confirm their readiness by no

later than May 29," the statement said.

A spokesman for the Dubai bourse said the DvP system will be

implemented from April 28 and brokers who are ready can utilise

the system from then. Others will be given time till May 29.

MSCI will announce in June whether it will upgrade the UAE

and Qatar from the 'frontier markets' category, a move that

could open up the countries' bourses to multibillion dollar

liquidity and drive index fund investments.

Many traders are pessimistic over whether MSCI will upgrade

the UAE, with low volumes and regional political unrest cited as

likely deterrents.

"These developments have not been planned just keeping in

mind the MSCI tag. Its great for the markets if we are upgraded

this year but its more important to protect the interests of all

market participants," said Arindam Das, regional head of custody

at HSBC.

"These changes cannot be implemented in a single day," Das

said, adding that the bank received positive feedback from

clients in the UK and Europe about the new settlement system

during a recent roadshow to explain the initiatives but wanted

more time to prepare for it.

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