Abu Dhabi Exchange Enhances Settlement Procedure to Meet International Standards

Abu Dhabi Exchange, the UAE’s main equities trading place announced that it is continuing the process of enhancing Delivery Versus

logoAbu Dhabi Exchange, the UAE’s main equities trading place announced that it is continuing the process of enhancing Delivery Versus Payment (DVP) model, which ADX launched in May of 2011, through applying Buyer Cash Compensation (BCC) settlement procedure. The new procedure, which will take effect in May 2013, means that a buying investor will be paid cash compensation in the unlikely event where securities are unavailable for delivery to the buying investor on settlement date.

With the implementation of BCC, ADX not only seeks to reinforce the current implemented DVP model, but also to keep in adherence with international standards for financial markets infrastructure. Especially since efficient and safe securities clearing and settlement systems are a necessary condition to ensure smooth functioning of payment systems and of the preservation of financial stability.

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UAE has three recognised exchanges, apart from the ADX there is the Dubai Financial Market & NASDAQ Dubai. Since the Dubai real estate crisis in late 2008, the UAE stock market suffered a major dent in trading volumes. The ADX had hit record trading in 2008 with average daily trade volumes reaching $300 million in US dollar terms, since the economic slump markets went down to a miserable $32 million.

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The Abu Dhabi Securities Market General Index (ADSMI) is trading at 3,056.21.

Commenting on the implementation of the upcoming procedure, Mr. Rashed Al Baloushi, CEO of ADX explained: “Totrue value through innovation in today’s economic climate is a real challenge – for any organization. We look forward to further collaborations with all of our stakeholders to drive the product development process forward.”

CEO of ADX added:”applying this new procedure reflects ADX’s ongoing strategy to apply the best international practices in the fields of securities infrastructure. It will assist us in utilizing the necessary measures to strengthen our overall frameworks, minimize operational risk, and streamline processes for effective day to day operations which will be vital as we continue to enhance services we provide to our stakeholders.”

ADX will be conducting briefing sessions for its market participants in order to explain the many aspects of this upcoming procedure.

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