The Regulated Short Selling enables investors to short securities listed on DFM through selling borrowed shares with a commitment to return to the lender based on the mutually signed agreement. To implement RSS, the brokerage firm has to ensure that the borrowed securities are located on the client’s account prior to placing a short selling order, with exception of DvP clients, as a lending confirmation is sufficient to proceed with the order. The RSS complements the Securities Lending and Borrowing activity whereby approved lenders can lend securities to approved borrowers for settlement of RSS trades.
The RSS list includes the following 19 securities based on the semiannual review of January 2018:
|Arabtec Holding Company|
|DAMAC Properties Dubai|
|Dubai Financial Market|
|Dubai Islamic Bank|
|Drake & Scull International|
|Gulf Finance Group|
|AL SALAM-BAHRAIN BANK|
|AFKAR S&P UAE UCITS ETF|
The above-mentioned securities have been selected based on the following criteria:
1. Securities included in any UAE Index issued by a rating agency will be automatically eligible for RSS and shall be removed on the effective date of its exclusion if the rating agency undertakes such an action.
2. Securities included in any DFM derivative program will also be automatically eligible for RSS.
3. All ETFs are automatically eligible for RSS immediately upon listing
4. Securities listed on the market and meet all the following criteria will be eligible for RSS activities:
a. Securities with market capitalization of not less than AED 1 billion and an aggregate turnover during the preceding 12 months to market capitalization ratio of not less than 50%.
b. Securities with value traded not less than AED 100 million throughout the evaluation period.
c. Securities with shares traded not less than 500,000 shares throughout the evaluation period.
d. Securities with number of transactions not less than 150 transactions throughout the evaluation period.
e. Securities traded on 50% of the total trade days throughout the evaluation period.
f. Securities with number of free float shares available for trading not less than 50% of the total number of company’s shares listed.
g. Availability of at least 5 percentage points of the ownership limit allowed for foreign investors.
h. Subject to the approval of SCA, the exchange may exempt any security from meeting any of the above-mentioned requirements.
5. Right issues and covered warrants are not eligible for short selling.
6. The list of eligible securities will be reviewed every 6 calendar months or if there is a review by the rating agency. The updated “Eligible Securities List” will be published after the completion of the periodic review of the previous six months of trading unless otherwise necessary or determined by the Exchange.
7. Previously eligible RSS securities will ceased to be eligible for RSS on the next trading day after notification by DFM. SLB transactions for these securities may remain outstanding. However, no new loans for RSS shall be permitted.