Dubai: The Swedish financial market regulator said yesterday that it approved the bid by Borse Dubai, the holding company of Dubai International Financial Exchange and the Dubai Financial Market to own the Nordic stock exchanges operator OMX AB.

"Borse Dubai fulfills the requirements to become the owner of OMX," Finansinspektionen (FI) or the Swedish Financial Regulatory Authority (FSA) said in a statement on Monday.

“FI's assessment is that Borse Dubai meets the requirements of the Securities Markets Act on the buyer of a qualifying holding in OMX," the regulator said.

With this regulatory approval, Borse Dubai has moved one step closer to acquiring OMX in a joint bid with the US technology bourse Nasdaq. Reacting to the FSA's announcement Essa Kazim, Chairman of Borse Dubai said he was expecting this news and welcomed the FSA's decision.

Earlier this month, senior Borse Dubai officials had said that they were confident of completing its acquisition of OMX and the deal with Nasdaq in early 2008, through which it will acquire close to 20 per cent stake in the US exchange.

Complex agreement

Borse Dubai and Nasdaq had entered into a complex agreement on September 20 by which the Dubai firm would eventually sell all its OMX shares to Nasdaq in return for a 19.99 per cent in the merged entity between Nasdaq and OMX. The deal would also result in Nasdaq acquiring a stake in DIFX and re-branding it into Nasdaq-DIFX.

The deal is subject to clearance from both the Securities and Exchanges Commission (SEC) and the US Treasury. Treasury as leader of the inter-agency Committee on Foreign Investment in the United States (CIFUS), will assess whether the sale has any national security implications for the US.

Borse Dubai and Nasdaq together had raised the offer price to 265 crowns per share from the original Borse Dubai offer of 230 crowns per share. In Late September, Borse Dubai and Nasdaq secured irrevocable undertakings from Investor AB, Nordea Bank AB, Olof Stenhammar, Didner & Gerge Fonder AB, Nykredit Realkredit A/S and Magnus Böcker, who together hold approximately 18.5 per cent of the total number of votes and shares in OMX, taking Borse Dubai's total holding's in OMX close to 50 per cent.

In addition to a 6.5 per cent holding by the Swedish government, institutional investors have significant minority holdings in OMX. While Qatar Investment Authority owns 10 per cent stake in OMX, recently there were unconfirmed reports in the UK press that Qatar would swap its OMX shares in exchange for some of Borse Dubai's holdings in London Stock Exchange (LSE).

Currently, Borse Dubai and Qatar has 28 per cent and 14 per cent stakes in LSE, respectively.

Earlier this month Kazim said at a capital markets forum in Dubai that Borse Dubai's investment is LSE is purely strategic and it has no intention to play any role in the management of the UK bourse.