Monday, Jun 06, 2011
DUBAI (Zawya Dow Jones)--Nasdaq Dubai plans to move to a T+3 settlement cycle, from its current T+2 cycle, from early July as it seeks to minimize failed trades, a key requirement for a possible MSCI upgrade for the U.A.E. stock markets.
"The [proposed] enhancements will allow more time for international investors in different time zones to settle their transactions on Nasdaq Dubai's market, and will minimize rejections of trade obligations by settlement agents due to non confirmation of trades by their clients," the bourse said in a statement posted on its website late Sunday.
The Dubai Financial Market owns a 67% stake in Nasdaq Dubai, according to Zawya.com. The two bourses merged last year, with Nasdaq Dubai outsourcing its trading and other operational functions for equities to DFM, enabling DFM's more than 500,000 individual investors to trade on the same platform as Nasdaq Dubai's institutional investors.
The U.A.E. stock markets, along with Qatar, are under MSCI review for a possible upgrade to emerging market status, from frontier market. Many international investors and fund managers track emerging markets closely.
The DFM and Abu Dhabi Securities Exchange, or ADX, adopted the delivery versus payment settlement mechanism in April--a key MSCI requirement. Under DvP, the delivery of securities is done simultaneously with payment, meaning that neither the buyer nor the seller is exposed to the risk that the other will default.
Last month, MSCI said on its website that it will announce the results of its 2011 annual market classification review on June 21.
MSCI had said that it will use all available information up until the announcement date in the assessment of these proposals.
Many analysts say the two frontier markets--U.A.E. and Qatar--have satisfied most of MSCI's requirements for an upgrade, but say much will also depend on the demand for such a move by foreign investors and fund managers.
Abdullah al Tureifi, the head of the U.A.E.'s country's securities and commodities authority, told reporters in Abu Dhabi Sunday that he was expecting a positive response from MSCI when its decision is made public on June 21.
"The U.A.E. has complied with all the conditions required from it and we are waiting hopefully for a positive reply in the coming short period," he said.
-By Nikhil Lohade, Dow Jones Newswires, +9714 446 1694, nikhil.lohade@dowjones.com
Copyright (c) 2011 Dow Jones & Co.
(END) Dow Jones Newswires
06-06-11 0801GMT
