Dubai Financial Market (DFM) has announced the introduction of a new ‘allocation account’ system for brokerage firms to execute transactions on behalf of clients.
The exchange said the service was designed to cater to the requirements of international fund managers and improve market participation.
It enables brokerages to implement the orders of clients through the account and allocate quantities to each investor based on the average price of the transactions.
The new service will be exclusively used for delivery versus payment clients and all transactions undertaken must be allocated to a client’s account within 45 minutes of the end of the trading session.
DFM chairman Essa Kazim said the mechanism was designed to facilitate international funds that trade on behalf of several investors.
“The service has created a proficient electronic interface for trading activities of such funds enabling them to implement their daily transactions and allocate the proceedings to investors’ accounts in a fair and transparent way based on the average price,” he added.
“We believe that this significant step will further facilitate market accessibility for international funds and further promote their participation especially that it complies with their way of doing business.”
The exchange said it had set comprehensive regulation governing the new mechanism including timeframes of allocating transactions after the trading session.
Ownership limits for different nationality categories have also been included.
Brokerage companies must apply for approval to use the account for trading. Two firms are in the final stages of preparing to use the facility after the completion of technical testing.
If the brokerage fails to allocate securities within 45 minutes of the trading session closing the market will automatically allocate them to an automatic allocation account with the clearinghouse of the brokerage.
Brokers must sign an agreement with each client indicating they are willing to use an allocation account and their account number should be linked to it.
The new addition adds to a short-selling service DFM rolled out at the end of last year that will be updated every six months.