ADX launches Technical Short Selling service

Abu Dhabi Securities Exchange, ADX, Tuesday announced the launch of its latest investment service ‘Technical Short Selling’ (TSS), an addition to the existing suite of services and products provided by ADX to investors through brokerage firms. The launch of this new service falls in line with ADX’s strategy to increase liquidity levels as well as diversify investment and hedging instruments in order to better attract specialised foreign investors. ADX is the first market in the Gulf region to offer this service.

The TSS service allows the investor to sell stocks 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.

Rashed Al Blooshi, Chief Executive of ADX, confirmed the adoption of an integrated regulatory network and structure to help protect against fraudulent practice, and ensure a fair and secure trading environment in accordance with best international practices. Al Blooshi said: "Abu Dhabi Securities Exchange (ADX) is keen to define a set of clear laws, rights and obligations governing transactions under the technical short sale service for brokers and investors alike. We are committed to transparency, with an absolute adherence to publish all information related to the service on a daily basis via our website. This will give investors the confidence to invest their savings in the new service, knowing it sits within an advanced legal framework characterised by trust, fairness and open disclosure."

"The technical short selling service benefits brokerage companies, their customers, market makers and any entity deemed efficient by ADX to use this service. ADX has adopted a flexible implementation mechanisms for the TSS. This service comes within the framework of Abu Dhabi Securities Exchange’s strategy to enhance the investment environment in the Emirate and attract more foreign investment, in line with Abu Dhabi’s 2030 Economic Vision," he added.

Ehab Rashad, CEO of Al Safwa Mubasher Financial Services, the brokerage firm who will be the first to provide the technical short selling services to their customers, said, "We are always keen to provide the latest cutting edge financial services to benefit our customers, of which the technical short-selling opportunity is the latest."

As part of efforts to strengthen its legal, economic and legislative environment, ADX has implemented measures to regulate the short sell service including, trade suspensions for a 5 percent drop in the reference price of a given stock or if short sold securities reach 10 percent 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, this comes in addition to the existing approval frameworks utilised by both the lending and borrowing agent.