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Dubai Financial Market DFM , the emirate’s main stock exchange, has issued rules allowing the lending and borrowing of securities, part of efforts to make the market more flexible ahead of an influx of foreign funds.
Lending and borrowing of securities is expected to begin in the first quarter of this year, if investors are ready, DFM said in a statement seen on Friday.
Securities lending and borrowing will help the development of other products on DFM such as exchange-traded funds, said Maryam Fekri, an executive vice-president of DFM.
The United Arab Emirates market regulator, the Securities and Commodities Authority SCA, approved regulations for securities lending and borrowing in October 2012 but exchanges have taken considerable time to introduce the practice, partly because of concern about causing instability.
DFM’s rules say approved agents must be involved in the practice and appear to stop short of allowing full-fledged short-selling of stocks.