Within the framework of the initiatives aimed at developing the market’s working mechanisms and enhancing its liquidity, and through the fruitful cooperation between the Qatar Financial Markets Authority, the Qatar Exchange and a deposit company, the Qatar Stock Exchange is pleased to announce the commencement of the Covered Short Selling activity and the activity of lending and borrowing securities. Finance (Securities Lending & Borrowing).
Under the regulatory framework, covered short selling operations will be subject to the covered short selling rules issued by the decision of the Board of Directors of the Qatar Financial Markets Authority No. (5) of 2022, and these operations will also be subject to the rules of lending and borrowing securities issued by the decision of the Board of Directors of the Qatar Financial Markets Authority No. (4). For the year 2022, as well as for the Qatar Stock Exchange’s procedures for covered short selling issued pursuant to Market Notice No. (026) for the year 2023 and Market Notice No. (027) for the year 2023 and the rules and procedures of the Deposit Company for lending and borrowing securities.
Covered short selling will be permitted only to market makers, liquidity providers and qualified investors, including members, and any other cases approved by the Authority, while lending and borrowing of securities will be carried out in the post-trading system at a depository company by its members or licensed custodians to do so. Activity by the Authority in the name of “Securities Borrowing and Lending Agents”, where the role and responsibilities of those agents were defined under Article (3) of the Securities Lending and Borrowing Rules issued by the Authority.
Mr. Abdulaziz Nasser Al-Emadi, Acting CEO of the Qatar Stock Exchange, stressed the importance of launching this activity and its role in enhancing liquidity in the market and providing new investment tools for those interested in what helps them and provides them with better options for optimal investment in the market. He said that such initiatives are necessary to launch the derivatives market and to approve the investment tools that will be traded. He also stressed that the availability of these tools, along with other tools, would contribute mainly to the promotion of the Qatari market to the ranks of global markets.
Mr. Al-Emadi expressed his thanks and appreciation to the Qatar Financial Markets Authority for agreeing to launch the two initiatives out of keenness to keep abreast of best practices in major global markets.
The rules of covered short selling stipulate that short selling transactions may only be executed at a price higher than the last price traded on the same security, as the “Uptick Rule” will apply to all dealers, and it will be the responsibility of the broker to ensure that the sale order is entered. Short in a trading system at a price that is at least one pip higher than the last traded price of that security.
In order to ensure optimal benefit from the covered short selling initiative and the lending and borrowing of securities, the Qatar Stock Exchange invites market participants and those interested to read the rules and procedures for this activity contained in the two market notices No. (026) and (027). And when needed to obtain any clarifications or additional information, it is possible to contact the Qatar Stock Exchange through the addresses shown on the website of the Stock Exchange, noting that the Stock Exchange management will start, starting from next week, offering a package of educational materials, seminars and training courses on this activity, in both Arabic and English, The dates of these seminars will be announced on the Qatar Stock Exchange website and on social media.