Dubai PR Network, Online Press Release from Dubai and Middle East
 
Business, Banking and Investments(Banking & Investments)
Filter PR by
  
Abu Dhabi Securities Exchange (A) Launches Covered Short Selling and Amends the Securities Lending and Borrowing Guidelines
 

New measures to offer broader and more sophisticated investment platforms will create further scope for increased trading and liquidity.


Abu Dhabi, 14 October 2020:  Abu Dhabi Securities Exchange (ADX) today announced the launch of its latest investment service 'Covered Short Selling', to support the exchange’s strategy of diversifying investment and providing investors with a broader range of hedging mechanisms. By doing so, it will attract a new segment of specialized and experienced investors, driving both liquidity and trading volumes. 


The launch of CSS comes after the Securities and Commodities Authority (SCA) approved ADX’s covered short selling guidelines, which enable investors to sell borrowed securities or financial securities pledged for return to lenders.

Covered short selling involves investors selling shares in a specific company that they do not own at the time, but which they believe to be over-valued, which creates an obligation to buy them in the future. This can be done by borrowing the shares they wish to sell from a brokerage company and then selling them directly in the market in anticipation of a decrease in the share price. If the share price subsequently falls, the investor can buy back the shares at a price lower than the selling price and then return the shares to the lender (a process known as short selling coverage), thereby making a capital profit from the process. 

Short selling will enhance the presence of long-term investment and limit speculation. One of the most important benefits is enhancing liquidity through increasing trading values, since the lender of shares is usually a long-term investor who does not regularly trade. The process also increases investment awareness and transparency on the Exchange.

It is also possible to deploy short selling as a hedging tool by going short on shares in a similar type of company, either at an amount equal in value to shares already owned in a portfolio (direct hedging), or at a lower amount (partial hedging). The objective is to mitigate against losses arising from a future decline in the value of the stock originally held in the portfolio. 

H.E. Mohamed Ali Al Shorafa Al Hammadi, Chairman of ADX, said: “ADX is founded on an integrated legislative structure, to ensure that all relevant parties comply with covered short selling guidelines. This ensures a fair and secure trading environment in accordance with international best practice, making it more attractive to a broader range of investors. It is very important for us to have in place clear laws, rights and obligations to govern transactions both for brokers and investors, in order to give investors the opportunity to invest their savings in an advanced legal environment that is underpinned by fair and transparent disclosure regulations.”

In a related development, ADX has also amended its securities lending and borrowing guidelines, whereby the ownership of shares can easily be transferred from one party (the lender) to another (the borrower) on a temporary basis. The new guidelines place a commitment on the borrower to return the shares at the request of the lender at any time during the period, unless otherwise agreed.

These amendments were made after consultation with all of ADX’s market members. They are also consistent with other related guidelines and procedures that support the exchange’s efforts to continuously review and improve its systems and controls to comply with best practice. By issuing updated guidelines for lending and borrowing securities, ADX is enhancing the efficiency of Abu Dhabi’s capital markets and enabling investors to adopt different investment strategies.


Posted by : Dubai PR Network Editorial Team
Viewed 2800 times
PR Category : Banking & Investments
Posted on : Wednesday, October 14, 2020  12:42:00 PM UAE local time (GMT+4)
Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of DubaiPRNetwork.com.
Previous Story : Dubai Based NY Koen Group Set to Purchase Israir
Next Story : Al Ansari Exchange tops list of most prominent transfer and ...
Email this article Print this article

Share this article with your friends and followers
NewsVine
Back to Section Home

Related Stories



 
 
Most Viewed Press Release posted in the last 7 days
Devika Bulchandani Named CEO of Ogilvy North America & Global Chairwoman of Advertising [4416-Views]
Say Yes to Rejuvenated Skin with Filorga's Anti-Ageing Skincare Regimen [3612-Views]
What You Don't See [2632-Views]
Registrations Now Open for the 3rd Edition of the Dubai Festival City Santa Run [2460-Views]
National Geographic Premieres Virus Hunters: A Chilling Chronicle of the Heroic Experts on... [2374-Views]
Al Tayer Motors Wins Ford Trucks' Champions Award 2019 [2288-Views]
Persil Rewards Aspiring Abaya Designers With Scholarships [2202-Views]
MBRU-LED Genetic Study Reveals Crucial Insights Into Make-up of MRSA Superbug [2050-Views]
Discover Your Perfect Shade of Beige this Autumn/ Winter from Emilia-Romagna [1976-Views]
DHA Approves Saliva for COVID-19 Testing in Children [1870-Views]
UK Ambassador to the UAE Receives Latest Update on Covid-19 Vaccine From SEHA [1865-Views]
UAE Businesses Urged to Follow WHO Legionella Guidelines To Avoid Health Risks [1816-Views]
Invesco Analysis Shows Investors Using Futures for Gold Exposure May Be Overpaying [1800-Views]
Samsung Invites UAE Consumers to Experience the All New Air Dresser at Galeries Lafayette [1722-Views]
Philips World COPD Day Survey Reveals Global Shifts in Awareness and Action Surrounding Re... [1714-Views]
Karl Lagerfeld Introduces a New Style in the Fall-Winter 2020 Eyewear Collection [1714-Views]
Sanctuary Refined: New Lincoln Nautilus Brings Serene Design, Elevated Technology to Midsi... [1710-Views]
IATA Travel Pass Key to Reopening Borders Safely [1660-Views]
AquaChemie Breaks Ground on $40 M Petrochemical Terminal at Jebel Ali Port [1648-Views]
Dubai Health Authority Launches a New Stand-alone Laboratory Facility [1603-Views]
"Be Flawless" for the Perfect Complexion [1587-Views]
3 Day Super Sale Offers Up to 90 Percent Off Big Name Brands [1558-Views]
Emiratis Al Hassani and Al Zeyoudi Bag Men's Honours at Al Marmoom Dune Run [1546-Views]
Millions of Lung Cancer Patients See Gene Therapy and Immunotherapy Medical Innovations as... [1537-Views]
Preliminary Camel Race for the National Day Camel Marathon kick-off on Friday, 27 Nov [1537-Views]
 
RSS Facebook Twitter LinkedDin
 
Top Sections
 
Top Stories