UAE’s NBAD to act as securities lending and borrowing agent
The bank said it had been granted approval to become an agent by the UAE Securities & Commodities Authorit
National Bank of Abu Dhabi said on Tuesday it had won approval to act as the first securities lending and borrowing agent in the United Arab Emirates, as part of reforms aimed at adding liquidity and efficiency to the market.
The UAE’s main market watchdog has been introducing reforms over the last few years to help revive the Gulf state’s moribund equity markets, which have not kept pace with the country’s economic growth due in part to a lack of regulatory development.
NBAD is the largest lender by assets in the UAE and said in a statement that it had been granted approval to become an agent by the UAE Securities & Commodities Authority.
NBAD will be able to borrow, and lend out, shares for use in market making activities. Lenders will be able to earn revenue from the use of their shares and NBAD, as the borrower, will be obliged to return the securities to the lender at an agreed date, on demand.
"The combination of these capabilities will allow NBAD to offer its institutional clients a distinctive opportunity to earn incremental revenue on share positions which would have otherwise remained dormant and likely add liquidity and efficiency to the market," Jonathan Titone, executive director and head of product development of global wealth at NBAD, said in the statement.
NBAD is also the UAE’s first licensed custodian bank and the first and only official market maker since April 2014.
UAE regulations allow market makers to sell borrowed securities in order to maintain liquidity in those stocks, but other investors are not allowed to sell short.