Dubai exchanges’ merger described as possibility

A well-known official explained recently that with the combination of Dubai's top stock exchanges, Dubai Financial Market and Nasdaq Dubai, gates to new possibilities and opportunities would be opened.

Abdulla al-Awar, chief executive of the DIFC Authority, was quoted as saying in a newspaper, "Under a consolidated approach, because Borse Dubai owns both DFM and Nasdaq Dubai, the merger can be looked into."

Already, the two exchanges are in the procedure of merging some back office operations, such as clearing and trading - a move that initiated the rumor last year that they were moving closer to a formal merger. In fact, analysts have started foreseeing a merger of Borse Dubai's two exchanges, which will bring DFM and Nasdaq Dubai on to a single trading system.

Amidst global economic crisis, any consolidation would lead to a long-awaited reforming of Dubai's financial architecture.

Awar explained, "There aren't, to the best of my knowledge, any official talks. But one thing is for sure; when we develop strategies we will be in close contact with Borse Dubai, Nasdaq Dubai and our regulators, Dubai Financial Services Authority, to make sure that the proposition of the UAE is a good one."

The body that builds policies and oversees the strategic development and administration of the Dubai International Financial Center, or DIFC, is the DIFC Authority. The investment company for the two exchanges, DFM and Nasdaq Dubai is the Borse Dubai.

Essa Kazim, Chairman of Borse Dubai and Executive Chairman of DFM, specified before, "There are areas where we're working very closely together, where we could both benefit." He described cross listings between the two exchanges as an appropriate solution.

DIFC used to have a 100 per cent share in Dubai International Financial Exchange which is now known as Nasdaq Dubai, before the consolidation of Dubai's bourses.

DIFC, via its investment arm DIFC Investments, now owns 20 per cent stake in Borse Dubai, while the remaining shares are owned by Investment Corporation of Dubai (60 per cent) and Dubai Holding unit Dubai Group (20 per cent).

Al Awar said: "Importantly, it is now difficult to create the infrastructure that Nasdaq Dubai has and that is its leading edge."