The Qatar Stock Exchange will introduce margin trading this week in an effort to boost liquidity on the bourse, its chief executive said on Monday.
Group Securities, a brokerage firm, will be allowed to execute margin trades from Thursday.
“This initiative primarily aims to boost liquidity in the market and provide new financing channels for investors, especially those who are willing to buy large amounts of stocks for their portfolios,” Rashid al-Mansoori, the exchange’s CEO, said in a statement.
Regulated margin trading, in which investors borrow money from a broker to purchase stocks, increasing the size of their bets, has been allowed in the United Arab Emirates since 2012 and Oman since 2013.
But Gulf states have been cautious about introducing such services because of the risk that retail investors – who dominate trading in the region – may struggle to cover positions when the market turns against them.
While not the most illiquid stock market in the Middle East, Qatar struggles to generate large trading volumes, a problem exacerbated by big government holdings in many companies.