DUBAI- Dubai Financial Market (DFM) said on Sunday it had launched regulated short-selling, a move intended to boost liquidity in the stock market.
It said it was processing licence requests from seven brokerage firms to provide the service once they had received approval from the DFM and completed technical testing.
In short-selling, investors sell stocks they do not own to profit if prices have dropped when the trades are settled.
DFM's move comes after the Securities Exchange in neighbouring Abu Dhabi announced in October that it was introducing technical short-selling. Saudi Arabia began allowing short-selling in April.
For years regulators in the Gulf had shied away from the issue of short-selling due to fears that it could destabilise markets.
"We have carefully designed this new service to give investors the opportunity to short listed securities while safeguarding the market from any unsolicited repercussions on the market," said DFM Chairman Essa Kazim.
(Reporting By Tom Arnold; Editing by Gareth Jones) ((Tom.Arnold@thomsonreuters.com; +97144536265; Reuters Messaging: firstname.lastname@example.org))