The potential merger between Abu Dhabi Securities Exchange and Dubai Financial Market is on the table and discussions are on between top officials of the bourses, according to Essa Kazim, Chief Executive of the DFM.

"There were discussions at the top level, meaning the owners of the exchanges. It is in the interest of everybody to consolidate. Mergers among exchanges were seen in Europe and North America and helped reduce operating cost and support the development process," Kazim said, but he refused to give details of these discussions.

A source told Emirates Business that the Securities and Commodities Authority (SCA) already has some studies on a possible merger between the two markets and SCA had submitted these studies to both the ADX and DFM to give their opinion about the idea. "The merger idea is there and there are discussions but in their very early stages," said the source.

Kazim also announced that official procedures of the DFM's acquisition of Nasdaq Dubai would be finalised in two weeks. "We are in the final stages to get official approvals of the deal from the Securities and Commodities Authority and Dubai Financial Services Authority. Other technical issues of the merger will take more time. At the end, there will be one exchange with two markets as the DFM and Nasdaq Dubai will continue to operate."

However, the merger will give more liquidity to Nasdaq Dubai as individual investors in the DFM will be able to trade in securities listed in Nasdaq Dubai using the same investors' numbers, he said.

Listed companies in Nasdaq Dubai will have the option to change their trading currency from the US dollar to the dirham. "It is up to the companies to change the currency of trading on their securities to the dirham. I think local investors are more familiar with trading in dirham and this will attract more individual investors to listed securities in Nasdaq Dubai," Kazim said.

"The merger will attract more companies to list on both the DFM and Nasdaq Dubai as they will remain at separate jurisdictions. DFSA is allowing companies to float a minimum of 25 per cent of their shares while SCA requires at least 55 per cent. This difference is giving wide options for companies to select the jurisdiction they prefer," said Kazim, adding that there are talks with some companies to go for IPOs and the response is positive.

Kazim's statements came on the sidelines of a press conference by the DFM company to launch the iVESTOR card, an innovative solution designed to be the financial link between DFM and its investors.

The iVESTOR card launched in co-operation with Network International and Visa, the service providers and Emirates NBD, the issuer of the card. The iVESTOR card will be issued at no cost to over 30,000 investors of DFM Company shareholders for the financial year 2009 cash dividend.

"The cost of distributing cash dividends for shareholders is very high. For example, postal fees are at least Dh5 per cheque. There are also a lot of problems in the current system of distributing cash dividends so we introduced this new facility to overcome these issues," Kazim said. "The dividends will be transferred directly to the iVESTOR card and investors can get their dividends in the same day of distribution."

This potential merger is a very positive idea. However, regulatory authorities in the country should do a lot of work before taking such a step. Rules and procedures of trading in local markets should meet international standards in global markets to achieve a strong development in local financial markets Taimur Saadat, Arab Capital Markets

There would be advantages of economies of scale. One single market will have a single index and it would make it easier for investors to look at and follow market developments. The consolidated picture would help international investors too. We can expect increased trading and see more confidence among investors Krishna Murthy, Dubai International Securities

A merger, if it happens, would encourage investors, especially international investors who will have wider variety in same the market, rather than accessing two markets. However, there has been a gap between the two markets, ADX and DFM, in terms of certain procedures. This issue is vital and important for investors Wadah Al Taha, Financial Analyst

DFM and Nasdaq merger would be more helpful to retail investors to participate in national and international markets. For ADX and DFM, if any such move occurs, it would be a major advantage for the UAE and boost volumes. Consolidated, they would be able to better portray the picture of the UAE economy. Sajith Kumar PK,  JRG International Brokerage