ABU DHABI
The total value of margin trading facilities provided by brokerage companies operating at ADX and DFM amounted to Dh36.5 billion during the first quarter of 2017, an increase of 46 per cent over the same period in 2016.
According to official statistics, the margin trading accounted for 27.8 per cent of the total transactions conducted at ADX and DFM during the period from January till March 2017, which totalled Dh131 billion.
The DFM accounted for the largest share of margin trading, reaching Dh29.44 billion, which is equal to 30.55 per cent of the total cash inflows to the market since the beginning of the year, valued at Dh96.44 billion.
There is a continual demand over margin trading facilities despite the fluctuations witnessed by financial markets over the past three months, according to market brokers, who added that real estate and banking shares are the top performers in this kind of credit facilities.
Brokerage companies have called for increasing credit facilities provided to traders after it has transpired that such facilities reflect positively on trading sentiments when incentives are not up for grabs.
Under the current terms and conditions, the total finance a brokerage company is permitted to trade by margin is 300 per cent of its total and additional paid-in capital. The total margin trading financing given to a client should not exceed 10 per cent of the total funds allocated to margin trading by a brokerage company, as per the criteria endorsed by the Securities and Commodities Authority, SCA, in this regard. Collaterals are required for extended facilities, according to the SCA resolution issued in the year 2008.
The month of January witnessed the highest levels of margin trading facilities, amounting to more than Dh17 billion at ADX and DFM, while March saw the lowest level.
