The Dubai Financial Market

The Dubai Financial Market

Name

Affiliation

Introduction

The Dubai Financial Market (DFM) is a stock trade situated in Dubai, United Arab Emirates. It was established on March 26, 2000. Starting 2014, there are 67 organizations recorded on DFM. The vast majority of them are UAE-based organizations and a couple of others are double postings for organizations situated in other MENA district nations. Numerous organizations permit outsiders to possess their shares. Amid 2004 and 2005, there were noteworthy increments in the volume of shares exchanged and the offer costs of numerous organizations (Bremmer, 2010). Then again, towards the end of 2005 and through the initial couple of months of 2006 the air pocket blast and offer qualities dropped by around 60% on DFM, alongside comparative declines in most other Persian Gulf securities exchanges. DFM is one of three stock trades in the UAE. Abu Dhabi Securities Exchange (ADX) likewise records for the most part UAE organizations and NASDAQ Dubai was situated up to exchange universal stocks (Fernandez & Del Campo Baonza, 2010).

Mission and objectives

To give partners creative services in directing exchanging, clearing, settlement and safe of securities, in an effective, straightforward and fluid environment.

Activities

DFM works on a computerized screen-based exchanging framework. The majority of the world’s real stock trades have moved lately to comparative screen based exchanging frameworks. It offers an unmistakable preference over conventional floor exchanging terms of straightforwardness, liquidity and exchanging of costs (Fernandez & Del Campo Baonza, 2010). DFM has worked with prestigious universal specialists in the outline of an exchanging framework, which is reasonable, straightforward and effective, so speculators’ hobbies are served and the financial destinations of the UAE are met.

The exchanging framework is a request driven framework, which matches purchasing and offering requests of the financial specialists. Speculators can submit their requests with DFM certify merchants, who enter these requests into the exchanging framework. At that point, the framework consequently matches purchase and offer requests of a specific security in light of the cost and amount necessities (Fernandez & Del Campo Baonza, 2010).

The exchanging framework additionally creates and showcases subtle elements of present and recorded exchanging movement, including costs, volumes exchanged and exceptional purchase and offer requests (Fernandez & Del Campo Baonza, 2010). This guarantees that financial specialists have the obliged data to have the capacity to take educated speculation choices.

Defending the productivity and honesty of exchanging, obliges DFM to direct standard observing and controlling business sector action. Business Control Section screens agreeability with the exchanging standards and regulations of ESCA and DFM and serves to guarantee that exchanging is directed in a precise way (Fernandez & Del Campo Baonza, 2010). Specialists Licensing and Inspection Section screens representatives’ behavior to guarantee uprightness of the intermediaries’ exercises and that the best administration is given to speculators. Organizations Listing and Compliance Section endeavors to outfit financial specialists with all the important information concerning backers of recorded securities in a convenient way and to co-ordinate with the Market Surveillance Section to preclude the utilization of inside data.

Product/services

Nasdaq Dubai records prospects on the FTSE Nasdaq Dubai UAE 20 list and on 19 individual UAE stocks recorded on Nasdaq Dubai, the Dubai Financial Market and the Abu Dhabi Securities Market (Jeon, Oh & Yang, 2006).

In April 2009 Nasdaq Dubai presented a UAE value alternatives administration. Individuals have the capacity to report, exchange and clear client characterized alternative contracts on Nasdaq Dubai, with the cost and expiry date concurred by the gatherings to the agreement

Operations

DFM was a completely claimed by Dubai government until November 2006 when it transformed into an open business entity through an IPO, which prompted offer 20% of its imparts to open and 80% were subscribed by Borse Dubai, which is possessed by Dubai government. Point of fact, DFM’s IPO has been oversubscribed by 118 times (Jeon, Oh & Yang, 2006).

Like the income, DFM net benefit dropped strongly from the period finished 2007 till 2011. In 2007, DFM benefits came to 1,439.6 million including none operational benefits originating from IPO of AED 468 million. In 2008, benefits are just 605 AED million. The following year, in 2009, the benefit dropped considerably further and came to 346.62. In 2010, another drop occurred and benefits came to AED 79 million. Shockingly, in 2011, DFM recorded a loss of AED 6.45 million. From the pattern, we can infer that the circumstance is not enhancing, but rather is falling apart quite a long time. DFM BOD individuals, administrators, and chiefs are striving to get out DFM from this unforeseen predicament.

Over the previous years DFM has effectively executed different improvements including; innovation redesigns such the new exchanging framework (X-stream), different agents and guarantor services, for example, edge exchanging, iVESTOR cards, 24/7 reporting, business information sustains and web promoting open doors. New items and services in progress incorporate; the presentation of right issues, value swaps, warrants, Securities Lending and Borrowing and e-IPO services (Jeon, Oh & Yang, 2006).

Inside a brief time of time, Dubai Financial Market (DFM) has quick formed into the main money related market over the locale. Its continuous endeavors and key activities have further fortified Dubai’s position as an element capital markets center. DFM has constantly assumed a significant part in adding to the monetary markets division in the area through huge advancements and electronic services using the most progressive innovation.

DFM is the first trade in the UAE and the first freely recorded trade in the locale. DFM propelled its exercises on 26 March 2000. On 27 December 2005, the Executive Council of Dubai chose to change the trade into an open organization with a capital of US$ 2.178 billion, and 20% of the capital was offered through an IPO. In addition, DFM turned into the first Shari’a agreeable trade internationally since 2007 and this plainly mirrors the restored and yearning vision of His Highness Sheik Mohammed receptacle Rashid Al Maktoum, UAE Vice-President, Prime Minister and Ruler of Dubai to change the emirate into the capital of Islamic economy (Maghyereh & Awartani, 2012).

DFM is working as an optional business sector for exchanging of securities issued by open business entities, securities issued by the Federal Government or any of the Local Governments and open organizations in the nation, units of venture stores and some other money related instruments, neighborhood or outside, which are acknowledged by the Market. DFM furnishes its market members with huge worth included services, for example, Annual General Meeting administration services, IPO services, market information nourishes, electronic reporting, iVESTOR cards (for money profit conveyance) and operational backing (Maghyereh & Awartani, 2012).

As of end of November 2013, the DFM market underwriting US$ 70.24 billion, while the general list was up 81%, setting DFM as one of the best performing trades internationally since the start of the year. Exchange worth is measured at US$ 37.30 Billion YTD, a 200% development contrasted with the comparing time of a year ago.

Rules and regulations

NASDAQ Dubai is directed by the Dubai Financial Services Authority, this structure falls into various diverse classifications (Maghyereh & Awartani, 2012):

Rules which direct the methodology which organizations must take after on the off chance that they wish to have their securities confessed to exchanging available worked by NASDAQ Dubai.

Rules which manage the commitments of organizations after their securities have been confessed to exchanging (e.g., ceaseless revelation rules) – likewise secured by the Issuers and Securities Rules

Rules which manage the procedure which a substance must follow keeping in mind the end goal to turn into a Member of NASDAQ Dubai.

Rules which direct the conduct of Members available worked by NASDAQ Dubai and the commitments which Members owe to their customers – additionally secured by the Business Rules.

Rules which direct Clearing and Settlement techniques are secured by the NASDAQ Dubai Business Rules.

Benefits and usage

And in addition offering straightforwardness in a very much controlled environment, Nasdaq Dubai’s subsidiary administration gives straightforward entry to a unified commercial center. Together, these highlights are prone to draw in wide market cooperation. All Nasdaq Dubai individuals have the capacity to apply to wind up subordinates Members (Maghyereh & Awartani, 2012).

The UAE subsidiaries business sector has been ruled by OTC exchanges between a predetermined numbers of real venture banks. The vicinity of devoted business creators giving on screen liquidity will help general exchanging volumes. By giving focal counterparty clearing, Nasdaq Dubai will go about as counterparty to all exchanges accordingly lessening credit hazard introduction for business sector members (Maghyereh & Awartani, 2012).

DFM has dependably been on the radar of outside financial specialists since its initiation in the year 2000 pulled in by the sizeable venture opportunities and simple availability. DFM is a speculator driven business sector with no confinement on capital repatriation, negligible hazard and also being a duty free trade. At present, outside speculators represent 16% of the aggregate business proprietorship and 43% of aggregate exchanging movement. Retail speculators claim 29% of the aggregate business underwriting while their exchanging records for 76.5%. Right now, we have 65 recorded securities including; 12 Banks, 8 Investment & Finance, 13 Insurance, 7 Real Estate, 4 Transport, 2 Industrial, 5 Consumer Staples, 2 Telecom, 2 Services and 10 on NASDAQ Dubai.

DFM is at the heart of the worldwide economy with Dubai’s position as the capital markets center point and passage to the Middle East and North Africa (MENA) area. Our trade is effectively open for remote speculators and the vast majority of our recorded organizations are interested in outsiders (Jeon, Oh & Yang, 2006). Right now DFM has more than 270,000 outside financial specialists notwithstanding more than 500,000 UAE speculators implying that outsiders speak to 35% of enrolled financial specialists on our trade. DFM’s recorded securities are UAE based organizations as well as incorporate numerous double postings from around the district, for example, Kuwait, Bahrain. Indeed, we are the most supported posting venue in terms of double postings. We are incorporated in the key Emerging Market lists, for example, S&P Dow Jones, FTSE and Russell.

References

Bremmer, I. (2010). The end of the free market: who wins the war between states and corporations?. European View, 9(2), 249-252.

Fernandez, P., & Del Campo Baonza, J. (2010). Market risk premium used in 2010 by professors: a survey with 1,500 answers. Available at SSRN 1606563.

Jeon, J., Oh, Y., & Yang, D. Y. (2006). Financial market integration in East Asia: regional or global?. Asian Economic Papers, 5(1), 73-89.

Maghyereh, A., & Awartani, B. (2012). Return and volatility spillovers between Dubai financial market and Abu Dhabi Stock Exchange in the UAE. Applied Financial Economics, 22(10), 837-848.

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