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29 March 2024

Dubai brokers ready for DvP: DFM

Published
By Staff

Dubai Financial Market (DFM) announced today that its licensed brokers and custodians are ready to employ the newly introduced Delivery versus Payment (DvP) settlement mechanism.

DFM went live with DvP on April 28, 2011, placing the exchange amongst leading regional markets adopting this mechanism. “As of today, members and custodians can execute trades based on this internationally acclaimed model,” the bourse said in a statement.

“We are extremely delighted to see our members who deal with custodian banks’ clients in particular, are ready to fully utilize DvP,” said Essa Kazim, Managing Director and CEO, Dubai Financial Market.

“The introduction of this model reflects DFM’s ongoing commitment to develop the exchange’s infrastructure and adopt international best practices. We would like to extend our sincere gratitude to the UAE Securities and Commodities Authority (SCA), brokerage firms and custodians for their collaboration with DFM and support which helped us to successfully accomplish this significant step.”

The DvP plays an integral part in safeguarding investors’ rights and under this new mechanism, the investor who deals with the custodians will be able to reject sell or buy trades in case it fails to match the order.

As a result, this mechanism limits the risk related to transactions and ensures the transfer of ownership of securities from the seller to the buyer concurrently with the transfer of the transactions’ value from the buyer to the seller.

Further, this mechanism ensures local custodians have full control of the securities, reject sell and buy trades and thus make it unnecessary to run Dual Accounts.

According to experts, the DvP system is a prerequisite for bourses to achieve MSCI’s emerging markets status. MSCI will announce in June whether it will upgrade the UAE and Qatar from the ‘frontier markets’ category, a move that could open up the countries’ bourses to multibillion dollar liquidity and drive index fund investments.