Covered short selling and securities lending and borrowing activities are to commence in Qatar, according to Qatar Stock Exchange (QSE).
The move is part of an initiative to develop market mechanisms and enhance liquidity in the region. It was brought about by the cooperation between the Qatar Financial Markets Authority (QFMA), QSE and Edaa, a Qatar Depository company.
Covered short selling will be allowed solely for market makers, liquidity providers and qualified investors, including members and any other cases approved by the QFMA.
Under the regulatory framework, covered short selling operations will be subject to the covered short selling rules issued by the QFMA under Board Resolution No. (5) of 2022.
These operations will be subject to the securities lending and borrowing rules issued by the QFMA under Board Resolution No. 4 of 2022, as well as QSE’s procedures for covered short selling issued under Market Notice No. (026) of 2023 and Market Notice No. (027) of 2023, and the rules and procedures issued by the Edaa regarding securities lending and borrowing activity.
Securities lending and borrowing transactions may be executed into Edaa’s post-trade systems by Edaa members or by custodians licensed as securities lending and borrowing agents by the QFMA.
According to QSE, the covered short selling rules stipulate that transactions can only be executed at a price higher than the last traded price for the same security, where the Uptick Rule will apply to all traders.
Brokers will be responsible for ensuring that the covered short selling order is entered into the trading system at a price at least one point higher than the last traded price for that security.
Commenting on the announcement, CEO of Qatar Stock Exchange Abdulaziz Nasser Al-Emadi says the initiative is significant to enhance market liquidity and introduce new investment tools that will offer investors improved options for optimal investment in the market.
Al-Emadi comments that such initiatives are “essential for launching the derivatives market and adopting the tradable investment instruments”. The availability of these tools, alongside other instruments, would contribute primarily to “upgrading the Qatari market to advanced status”, he adds.
