The move is considered unique – regionally – when the Securities and Commodities Authority (SCA) granted Emirates National Bank of Dubai the license for the service – after modifications on brokerage regulations.
The license for Emirates National Bank of Dubai is expected to pave the way for many small brokerage companies to be transformed into full trading members, which will reduce the operational costs and increase its financial capabilities.
ADX has also confirmed that all its systems do cope with the highest global standards that would facilitate the work of general clearing members after securing the required procedures for this service.
The Exchange said that the requirements to obtain this service include three standards: (1) filling the form for this activity including providing sufficient information regarding the clearing (2) writing a guarantee statement equivalent to 25 million Dirhams (3) obtain the approval of Securities and Commodities Authority.
ADX also expects that the general clearing service will witness high levels of activity in the coming period due to the fact that many brokerage companies need this service, which subsequently will allow increased volumes of trades, particularly when many brokerage companies are released from the previous bank guarantees to become full trading members.
SCA granted Emirates National Bank of Dubai the approval to become general clearing member in local markets – thus become the first side in UAE financial markets to practice general clearing. The approval came as part of the Authority’s plans to improve the performance of financial markets in UAE and promote it among global markets in the coming period.