Dubais Financial Market - Free Essay Example

Sample details Pages: 6 Words: 1766 Downloads: 7 Date added: 2017/06/26 Category Finance Essay Type Argumentative essay Did you like this example? Dubai Financial Market Contents Don’t waste time! Our writers will create an original "Dubais Financial Market" essay for you Create order Mission and Objective: Activities: Products / Services: Operations: Rules and Regulations: Benefits and usage: Mission and Objective: Dubai Financial Market, the stock exchange of UAE is established on 26th March, 2000 at Dubai as a public institution having its own independent corporate body by a resolution from the Ministry of Economy no, 14 of 2000. The DFM is working as a secondary market for trading of securities issued by public joint stock companies, bonds issued by the Federal Government or any of the local Governments or any public institutions of the country, units of investment funds, and any other local or foreign instruments, acceptable in the market. The mission of DFM is to provide different types of professional services related to stock exchange market to ensure with the variety of innovative services related to Trading, Clearing, Settlement and Depository of different instruments in an efficient, transparent and liquid environment. There are three such institutions in UAE, named as Dubai Financial market, Abu Dhabi Security Exchange- who is mainly working on the UAE Companys securities and NASDAQ Dubai-mainly deals in foreign instruments. The concept of stock exchange market is relatively new to UAE and people were keen to know the tricks of investing in stock exchange market. To guide them in proper manner the Government established DFM with common objective of educating the investment savvy Emiratis with the perspective of huge interest to be grown in UAE people and the revenue generation by way of volume of trading to the Government treasury. When a stock exchange is established in any country, the companies rush to list their instruments there for easy, transparent and professional trading enabling the companies to flourish with their performances. DFM is no exception, particularly with the high level of professional execution, the members are happy. The credential of a stock exchange may be derived by the volume of transactions take place for certain period, but behind the screen, the satisfactory level of the clients are also major factor to rate the stock exchange abo ut its efficiency level. The basic values of DFM to be followed are- transparency, confidentiality, efficiency, innovation and integrity. A long path to be flowed with the strong values makes the venture successful and trust worthy for the members of the institution. DFM runs with a vision to prove its entity as the World Class Regional marketplace. Activities: The activities of DFM are multi-folded- 1) To enlist new instruments in the exchange. 2) Calculate the derivatives 3) Ensure the smooth function of trading 4) Disbursement of capital to the eligible entity 5) The collection of revenue related to the transactions 6) The proper launching IPOs To enlist the new instruments in the market, there are certain systems which are set by the universal guideline and the same is to be followed. For calculation of derivatives, there is some calculation based on statistics which is done at the exchange by the experts. For smooth trading, the software is to be full proof and should not be prone to break down. The shut down process for maintenance or overhauling may be exercised during the period of official holidays. The disbursement of capital to the eligible entities- the seller should be flown from the buyer through Demat bank account and the process is to cash n carry which is monitored by the portfolio managers of the stock exchange. The collection of revenue from the transaction to be debited to the seller and buyer and that invoicing is done as per the standard system which is automatic and should not falter. When an IPO is launched, there seems to be heavy propaganda in media related to that. The opening and the closing date ar e mentioned in the brochure. The monitoring of the entire procedure is the portfolio of stock exchange market. Products / Services: The following products are available from the desk of DFM:- Equity instruments- DFM operates as a secondary market for the trading of equities and other instruments issued by Public shareholding companies and Government and Quasi- Government entities whether based in UAE or overseas. The categories of equities provided by DFM are- 1) shares,2) Dual Listed Shares, 3) Other Financial instruments. The shares are of the limited company shares floated in the stock exchange can be bought and become the partial owner of the company. The dual shares are the shares listed in more than one market, like one share listed in DFM and Gulf Finance House. The category of other financial instruments includes TEFs, Security lending and Borrowing, Market Maker, Short Selling, Mutual Funds, Rights Issues and Cover Warrants. Debt Instruments- As per the vision of His Highness Sheikh Mohammed Al Maktoum, Prime Minister and Ruler of Dubai, with his initiative to develop into the Capital of Islamic Economy and transform Dubai into a global sukuk center, DFM is the pioneer of debt instruments as per the principle of Fatwaa and Sharia Supervisory Board. There are two types bonds readily available in DFM- 1) Sukuk (Islamic Bonds) and Bonds. DFM along with NASDAQ Dubai offer a selection of Sukuk through single trading platform, including Sukuk listed by equity issuers, government bodies and institutions. DFM and NASDAQ Dubai listed Sukuk are tradable on-exchange. The conventional concept of Sukuk is not as per the concept of bonds; here the interest is not payable in cash, instead accumulated in asset, usufructs and financial rights. Bonds are also floated in the market by DFM and NASDAQ Dubai in the forms of selection of bonds including bonds listed by equity issuers, Government bodies and institutions. DFM an d NASDAQ Dubai listed bonds are tradable on-exchange. Securities Lending and Borrowing- SLB is the term used for temporary loan against securities by a lender or borrower on the condition that the lender may recall the securities at any time of his choice, subject to normal market settlement cycle not withstanding any agreed maturity date, or borrower may return the securities at any time. The merits of SLB are that the process leads to market efficiency and liquidity, in turn reduces market volatility by reducing bid/offer spread and increasing bid/offer depth, allows price discovery and the arbitrage of pricing inefficiencies, supports the development of the capital market by facilitating various investment strategies. IVESTOR- Unique innovation for investors to get eh benefit of dividend receiving through the IVESTOR Card. As per the resolution of Securities and Commodities Authority with no 28/R of 2010, this concept is initiated by DFM, mainly for the youth below age of 21, to encourage them for trading in DFM security market. The feature of this card is to get the dividend through this card instead of cheques. the instant credit in the card make the holder ready for further deployment funds at his wish instantly with any ATM all over the world with VISA or Plus features. E Services- The E Service is fast track web based solution backed by latest technology run by DFM for the clients like investors, issuers, brokers and custodians and vendors. In todays fast paced world, the service is required urgently with the click of mouse. The information and services required by the associates are to be provided in their fingertips with updated data for their decision making to make easy and instant. Operations: Being launched in 2000, DFM is steadily growing with its operations towards different area of activities related to stock exchange. The area of operations increase with the addition of products or services provided to the clients. The promotion of basic products of financial markets is the key reason to enhance operations in such a level so that it can satisfy the cliental base, in house and overseas. The total listing of 67 UAE based companies and a few dual listing companies of MENA region countries make DFM a substantially big stock market with national and international transactions to reach a high point. Looking towards 2020 Dubai Expo, the stock exchange is already in revamping its operations by the guideline of Chief Operating Officer. The business of stock exchange, like other businesses seldom experience crest and trough and DFM is no exception. Born in 2000, DFM first experienced the downfall in 2006 with 60% value drop. In the year 2006 November, DFM was converted to a pub lic joint stock company by issuing an IPO with selling 20% of its stock to public and 80% held by Borse Dubai, owned by Dubai Government. The mode operation enhanced as per the demand of the situation and now DFM proves its worth by applying the operation process in proper line excelling the performance. Rules and Regulations: As per the Decision no 3/R of 2000 concerning the regulations as to disclosure and transparency the Chairman of the board of Directors of the securities and commodities authority having considered Federal law no. 4 of 2000 concerning the Emirates Securities and Commodities Authority and Market, Council of Ministers Resolution no 193/18 of 13.03.2000 concerning the constituting of the Board of Directors of the authority, after consultation and coordination with the bodies concerned in the establishment of markets in the state, and pursuant to the resolution of the Authoritys Board of directors at its meeting held on 29.10.2000, has decided to approve the following regulations as to disclosure and transparency. The rules and regulations are covered by Articles with no. 1 to 38 stating the various aspects of law related to the stock exchange market as per the rule set by UAE Government. The rules basically reserve the right of the associates of the stock market along with ensuring the i nterest of the associates. The rule not allows any such loopholes through which any untoward advantages can be availed by any of the associates to make other respective associate to loss. The laws are governed by the Stock exchange authority of UAE and DFM strictly follow the law to ensure proper execution in the lawful manner. Benefits and usage: Benefits of Dubai Financial market is being observed by the investors and issuers along with the other associates like vendors, brokers, custodians and the employee of DFM. The taste of share transactions with the view of profits or loss makes the people of UAE aware of the trend of stock exchange. The local UAE companies have the benefit of local listing and the investors have the benefit of trading in local as well as international segment of share trading. The usage of DFM is to earn revenue on behalf of the Government and to monitor the transactions to have the clear idea of share trading locally or internationally. The booming business environment of UAE looking forward towards Dubai Expo 2020 is supported by DFM and the end result to all associates will be favorable.