Dubai: Dubai Finnacial Market's direct competitors are the Abu Dhabi Securities Exchange (ADX) and the Nasdaq Dubai (formerly Dubai International Financial Exchange, DIFX). With the recent acquisition of Nasdaq Dubai by Dubai Financial Market, the two exchanges are expected to work in their mutually exclusive market segments complementing each other.
ADX was established on November 15, 2000, a few months after the DFM became operational and the DIFX began operations in September 2005 as an exchange catering to both regional and international firms seeking to raise capital.
Consolidating for economies of scale, international brand presence and operational gains are not new to Dubai's young exchanges. The Dubai Government announced on August 7, 2007 that it would consolidate its holdings in the DFM and DIFX into Borse Dubai, a new holding company, while DFM and the DIFX continued to be regulated by Dubai Financial Services Authority (DFSA) and the Emirates Securities and Commodities Authority (ESCA), respectively.
As a part of a deal between Borse Dubai and Nasdaq in September 2007, Nasdaq OMX Group acquired a one-third stake in DIFX and rebranded DIFX as Nasdaq Dubai. Borse Dubai's active role in global consolidation of stock exchanges in 2007-08, culminated in it acquiring a 21 per cent stake in London Stock Exchange and 19.9 per cent stake in Nasdaq OMX group.
Taking consolidation a step further, DFM annouced its aquisition of Nasdaq Dubai in December 2009.
"This acquisition was purely based on economic merit. We see more synergies — the merger would allow for dual listings and longer trading hours, increasing revenues, said Eisa Kazim, CEO of Dubai Financial Market.
As part of the regulatory requirements, DFM is in the process of creating a new holding company that would wholly own both DFM and Nasdaq Dubai.
"Under this new arrangement, Nasdaq Dubai will continue to function under the regulatory framework of DFSA. Meanwhile, many investors will be able to trade seamlessly on both exchanges as key back office functions, such as custody and clearing, will be consolidated early next year," said Jeff Singer, chief executive of Nasdaq Dubai.
While the integration of trading and back office functions of both markets is just a few weeks away, there have been reports about an imminent merger between DFM and ADX.
Sources in both exchanges have told Gulf News that there aren't any compulsions on both exchanges to seek an immediate merger.
"There are benefits in combining the strenghts of both exchanges. Across the world stock exchange mergers were driven by direct business gains and benefits for shareholders. In our case too, the move has to be driven by such direct gains," said Kazim.
