HSBC acts as custodian for debut DFM securities lending transaction

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HSBC has acted as custodian and agent lender for the first-ever securities lending transaction (SLB) on the Dubai Financial Market (DFM).

The transaction was conducted for a large regional asset owner, enabling HSBC, in its role as a prime broker, to borrow DFM-listed equities from the asset owner and provide access to the UAE’s burgeoning equities market for a global institutional investor.

“We are pleased to have collaborated with Dubai Clear and to have leveraged our deep local and global market knowledge to achieve this first-of-its-kind international transaction on the DFM,” said Adnan Hussain, global head of Agency Securities Lending and Liquidity Services.

“Securities lending activities contribute to a vibrant and robust marketplace, facilitate the efficient functioning of capital markets, and are expected to attract more international investors to the UAE as a result.”

DFM – Press release – HSBC executes the first international Securities Lending and Borrowing transaction on the DFM https://t.co/DrqZurSQDM pic.twitter.com/7pWqTn9kZt

— Dubai Financial Market (@DFMalerts) July 19, 2023

Nabeel Albloushi, managing director, head of Markets and Securities Services UAE and Regional Corporate Sales, MENAT, HSBC said the transaction is a further testament to the bank’s commitment to the development of the capital markets in the UAE.

HSBC supports DFM’s strategy

DFM said the execution of the first international SLB transaction is the latest step in the continued evolution and expansion of the city’s capital markets.

Providing end-to-end, over-the-counter, SLB transactions is a milestone development for the exchange that will enable investors to hedge their portfolios effectively. It also allows them to take new positions to derive additional opportunities on traded securities.

SLB is part of the critical infrastructure facilitating the regulated short selling of securities. It also allows asset owners and managers to enhance the yield of their long-term holdings by lending out their securities to borrowers for an annualised fee while retaining their rights to hold the securities.

“This transaction underscores the effectiveness of our market infrastructure to support our stakeholders’ implementation of market strategies. We look forward to seeing international participants making greater use of our SLB facility in the future,” said Hamed Ali, CEO of DFM and Nasdaq Dubai.

Dubai Clear is incorporated under Dubai Central Clearing & Depository Holding, a holding company for post-trade services fully owned by the Dubai bourse.