UAE domestic bourses will launch a new settlement system on April 28, the
country's regulator said on Monday, a key step that will bolster the country's
chances of earning MSCI emerging market status.
Dubai Financial Market DFM and Abu Dhabi Securities Exchange ADI will adopt a Deliver Versus Payment (DvP)
system - the global standard - the Securities and Commodities Authority (SCA)
After snubbing the UAE for a second time in 2010, index compiler MSCI warned
domestic bourses must change from dual account structures such as separate
custody and trading accounts.
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.
"DVP would help minimise the risks emanating from the delivery and
receipt of securities as both the ownership transfer and payment of securities
cost will be done simultaneously," SCA said in an emailed statement on
Many traders are pessimistic over whether MSCI will upgrade the UAE, with
low volumes and regional political unrest cited as likely deterrents, but the
latter will not be a factor, said Jeff Singer, chief executive of Nasdaq Dubai,
which has the same owner as DFM and uses the same trading platform.
"I don't think [political] events will have an impact," said Singer.
"MSCI looks more at the capital market structure than the politics."
Nasdaq Dubai is on track to introduce new listing rules in the second
quarter, Singer added.
These will oblige future listings to have a broader investor base and will
lower the bar on the size of company it will allow to list.
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