Dubai Financial Market: Beginning of a new era in capital market development in the UAE

Creation of Dubai Financial Market (DFM) was one of the first step in the creation of a well-structured capital market infrastructure in the UAE. The establishment of a formal stock exchange in Dubai marked the transition from an over the counter stock trading system to a formal market place with all the supporting infrastructure..

Sheikh Mohammed bin Rashid Al Maktoum, who was then Crown Prince of Dubai and UAE Defence Minister, smiles as he tours the venue of the newly open Dubai Financial Market at the World Trade Centre in Dubai in 2000.

Established as a public institution with an independent legal entity by virtue of Decree 14/2000 issued by the Government of Dubai, the DFM launched its activities on March 26, 2000. Above, general view of Dubai Financial Market at Dubai World Trade Centre in 2003.

Set up as a demutualised stock exchange, DFM was fully owned by Dubai government until November 2006. The exchange was turned into a public joint-stock company through an initial public offering (IPO), which led to the sale of 20 per cent of its shares to the public. Above, investors are closely monitoring the market trend in the morning hours in 2005.

On March 7, 2007, the Dubai Financial Market Company was listed on the market with the trading symbol DFM, becoming the first publicly listed regional exchange. The sale of DFM shares to the public marked the pioneering role played by the Emirate of Dubai in privatisation of government institutions through share sales in the region.

DFM is both governed and regulated by the Securities and Commodities Authority (SCA). SCA has the authority to impose laws and standards. SCA's role is to ensure that the laws are followed by the exchanges as well as to protect investors’, brokers’ and listed companies’ rights.

The DFM works proactively with the SCA to protect investors and provide an optimum trading platform, which includes initiatives such as the development of Margin Trading and Delivery versus Payment (DvP) mechanisms.

Over the past two decades, the DFM has fast developed into a leading financial market across the region. Its ongoing efforts and strategic initiatives have further reinforced Dubai as a centre of excellence in this part of the world and enhanced its leading position as a powerful capital market hub.

DFM operates as both primary market new share listings and a secondary market for the trading of securities issued by public shareholding companies, bonds issued by federal or local governments, local public institutions and mutual funds as well as other local or foreign DFM approved financial instruments.

DFM is the first financial market that is compatible with the provisions of Islamic Shariah on a global level since 2007, allowing investors from all over the world to invest in securities listed on the market according to the parameters and regulations of Islamic Law. For this purpose the DFM Fatwa and Shariah Supervisory Board has prepared the Standard to help investors identify the Shariah-compliant listed companies.

In 2010, the Dubai Financial Market consolidated its operations with Nasdaq Dubai to create a dynamic force in the region’s capital markets. The consolidation provides investors greater choice of asset classes and easier access to DFM and Nasdaq Dubai-listed securities via a single Investor Number (NIN), which means investors can trade seamlessly across the two exchanges. Both exchanges continue to be regulated separately, DFM by the SCA and Nasdaq Dubai by the Dubai Financial Services Authority (DFSA).

DFM has accelerated its efforts during the first half of 2021 to implement diversification strategy for investment opportunities offered to its growing investor base. DFM is currently amongst the leading regional markets in terms of financial products’ diversification as it provides equities, equity futures, bonds & Sukuk, REITs, ETFs, etc. The market is expanding products offering in order to provide investors with alternative investments, enabling them to flexibly manage their portfolios.