Qatar’s stock exchange plans to introduce margin trading and securities lending for institutional investors as part of efforts to boost liquidity and is in talks with index compiler FTSE on upgrading the country’s status, the bourse quoted its chief executive as saying.
The country’s upgrade to emerging market status by MSCI and S&P Dow Jones last year helped to increase average daily turnover by 160 per cent, Rashid bin Ali al-Mansoori told a conference in Doha, according to the statement.
“Furthermore, we are continuing with our efforts, with the support of our regulators, to introduce other initiatives which are aimed at enhancing the market. Examples of this are securities lending and borrowing and margin trading,” Mansoori said.
“We are working with the regulators to further expand availability (of securities lending and borrowing) to professional investors, allowing them to gain additional income through lending their shares.”
Borrowing securities allows investors to sell stocks they don’t own in the hope of buying them back at a lower price. Margin trading involves borrowing money to buy stocks, which increases the size of bets an investor can make. Mansoori did not specify when the reforms might take place.
He also said the bourse was in talks with FTSE, the only major index compiler which still classifies Qatar as a frontier market.
“We are now in discussions with FTSE regarding a potential upgrade in their rankings, which will add further liquidity to the market.”
FTSE said last September that Qatar was on its watch list for possible promotion from frontier to secondary emerging market in its September 2015 review.