ADX Grants Daman Investments Licenses to Provide Technical Short Selling Service

Press release
Published July 26th, 2018 - 08:27 GMT
During the event
During the event

In line with its strategy to enhance the UAE’s investment environment and support its sustainable economic growth, the Abu Dhabi Securities Exchange (ADX), the region’s leading financial market, granted Daman with the license to provide Technical Short Selling (TSS) service to its clients, making it the fifth company on the Exchange to do so. The announcement was made during a bell ringing ceremony on ADX’s trading floor, in the presence of representatives and executive management from both sides.

The TSS service allows investors to short stocks listed on ADX by selling borrowed shares that they don’t own, but can afford within the applicable settlement period (T+2), in order to achieve profit, buying the stock back if the value goes down.

Chief Executive of ADX, Rashed Al Blooshi celebrated the joining of Daman Investments to the list of companies providing TSS service on the ADX exchange and emphasized the importance of continually modernizing, enlarging and upgrading the market within a secure environment.

“Short selling is an advanced step not only as a hedging instrument, but also as a way of enhancing investment liquidity on the long run. The expectation for new traders is to find trusted brokers who can assist them in understanding and trading in an enabling, fair, sustainable and most importantly secure environment. This is why the TSS service that we offer comes with clear laws, rights and obligations governing transactions for brokers and investors alike, and information regarding all transactions under the service are published on a daily basis via the ADX website.”

“In an attempt to enhance its position as a leader in the brokerage services in the UAE, Daman Securities is so delighted to obtain a license for technical short selling from Abu Dhabi Securities Exchange (ADX). This step will help us improve and develop our services to better serve the local market. Further, we will seek to deepen our relations with the fast-growing Abu Dhabi Securities Exchange (ADX).” Mr. Shehab Gargash, Chairman of Daman Investments PSC, said.

For his part, Nabil Al Rantisi, Managing Director – Capital Markets at Daman Investments said: “The Company always seek to streamline the services rendered to its clients in alignment with the strategic plans to maintain its position as a market leader since its inception in 2002 to date. The obtaining of license for technical short selling from ADX is an assurance for the company’s successful policies given that the company is the fifth brokerage company to get this permit.”

As part of efforts to strengthen its legal, economic and legislative environment, the Exchange has implemented measures to regulate the short sell service including, trade suspensions for a 5% drop in the reference price of a given stock or if short sold securities reach 10% of the total capital issued.

ADX has also implemented a clear framework under which trades should take place, which specifies the obligation of the broker to disclose short dated trades, in addition to the existing approval frameworks utilized by both the lending and borrowing agent.

Al Blooshi added: “This efficient system guarantees instant disclosure for all stocks open for short selling, the daily volume, the dates of trading as well as the automatic time of these sales. This helps give investors the confidence to invest their savings in the new service, knowing it sits within an advanced legal framework characterized by trust, fairness and open disclosure and highlights ADX’s overall commitment to the same principles.”

ADX is the first market in the Gulf region to offer this service in the hope of raising market turnover, increasing liquidity levels, as well as diversifying investment and hedging instruments to better attract specialised foreign investors. This service comes within ADX’s commitment to continually develop and launch strategic initiatives that contribute to the Abu Dhabi Economic Vision 2030.

ADX has also held training sessions for brokerage firms, market makers, and local funds to supply the technical short selling service to their customers, understand its positive returns on consumers and market liquidity, as well as its contribution to enhance long term investment savings.

Background Information

Abu Dhabi Securities Exchange

Abu Dhabi Securities Exchange (ADX) was established on 15th of November 2000 by Local Law No. (3) of 2000, the provisions of which vests the Market with a legal entity of autonomous status, independent finance and management, and gives ADX the necessary supervisory and executive powers to exercise its functions.

Moreover, ADX has the authority to establish centers and branches outside the Emirate of Abu Dhabi, and so far it has done so in Al Ain, Zayed City, Fujairah, Ras Al Khaimah and Sharjah.

ADX's board of directors is comprised of seven members nominated by Amiri Decree. The members of the board hold office for a term of three years. The first board of directors was constituted by Amiri Decree No. (8) of 2000.

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