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Saturday, 15 May 2021 11:55 GMT

Qatar- New covered short selling rules set to make QSE more attractive


(MENAFN - Gulf Times) Qatar's securities market is now in the process of issuing new covered short selling rules as part of its reforms to make the market more attractive for the investors, especially foreign.
It is also in the process of modifying the procedures relating to the securities lending and borrowing (SLB) as well as omnibus accounts, the latter of which indicates the advent of derivatives in the capital market.
"The new short selling rules, updates to the lending and borrowing rules and pooled trading account procedures, aim to enable investors to use different investment strategies in line with the best practices in the financial markets," QSE chief executive Rashid bin Ali al-Mansoori said in a tweet.
The move appears to be the offshoot of a "strategic session" between the Qatar Stock Exchange (QSE) and the Qatar Financial Market Authority (QFMA) early this February, where discussions centred on various topics such as the launch of derivatives market as well as product diversification and enhancement of SLB, covered short selling and listing rules.
The QSE, which has given its response to the feedback sought by the QFMA, is awaiting the regulator's final approval.
Most short selling is done by hedge funds and institutional investors to cushion their positions against falling stock prices. The QFMA has already approved covered short selling with liquidity providers allowed to conduct short selling of the exchange traded funds or ETF units and index constituents for performing bona fide ETF liquidity provision activity.
Omnibus account is used with custodians to facilities more investors in one account and make it efficient to place orders.
An omnibus account is normally overseen by a futures manager. The futures manager uses the funds in the account to complete trades on behalf of the participating individual investors.
Market sources are of the view that one of the advantages of omnibus accounts is that it would reduce costs as one account is required for many investors and also ease the burden for issuers.
In a recently released Capital Market Report 2020, the Qatar Financial Centre had suggested creating a derivatives market, initially offering single-stock futures contracts, as part of the key recommendations for the country's capital market development.
A derivatives market would add to the breadth of Qatar's capital market, offering investors risk management tool to hedge their investments and business exposure.
The QSE had recently announced that it is looking into derivatives trading, indicating that it could be hosted on the exchange, supported by a listing framework and clearing and settlement through the Qatar Central Securities Depository.    

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