Margin law will boost stock markets

The UAE is expected to give the go ahead for a landmark law that allows margin trading in its two main bourses, and dealers said the move would provide a strong boost to share investments.

The Ministry of Economy is studying a draft law prepared by the Abu Dhabi and Dubai bourses in collaboration with the Emirates Securities and Commodities Authority (Esca) to permit stockbrokers in the country to provide loans to share investors.

“As far as I know, there is a draft law under consideration by the Ministry of Economy… our expectations are that it could be approved next month,” said Ziad Dabbas, share dealing adviser at the National Bank of Abu Dhabi, which is listed on the bourse.

“The plan has been under study for a long time but it will be enforced shortly. It is a good step as it will stimulate share trading in the market, attract investment and expand liquidity in the bourses.”

Under the new law, stockbrokers will be allowed to provide loans to investors in return for mortgage on their shares. Dealers said they expect the new law to include regulations governing lending operations.

Many stock markets in the Middle East and other countries already allow margin trading.
 
 

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