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UAE bourses should unify back offices even without merger : ADX CEO

Stock markets in the United Arab Emirates should unify their back office operations and processes for settlement and regulation, the chief executive of the Abu Dhabi Securities Exchange (ADX) said on Sunday.

Last year Abu Dhabi and neighbouring Dubai hired banks to advise on a possible state-backed merger of the ADX with the Dubai Financial Market (DFM), which would be one of the biggest reforms in the UAE’s financial industry in recent years.

Deputy Chief Executive of Abu Dhabi Securities Exchange Rashed Al Baloushi said that if a merger did not happen, consolidating the exchanges’ back offices, which handle record-keeping and other administrative tasks, would be a good alternative. Other bourses in the Gulf Cooperation Council could unify their back offices with the UAE’s combined system later, he added.

“It is a good step forward and very important for the stock markets. At ADX we will consider that point,” Baloushi said, citing the example of Cairo and Alexandria as well as European exchanges.

Baloushi said the ADX was initiating the idea of combining back offices and was recommending it to all stake holders, including investors, listed companies and brokerages.

Consolidating the back office operations of the ADX and the DFM could cut costs and, by creating a single framework for settling trades, make it easier for more foreign investors to enter the UAE, fund managers and analysts say.

The ADX expects this year to introduce market makers, dealers which maintain trading liquidity by undertaking to buy or sell at specified prices at all times, Baloushi said, adding that the exchange was working closely with the UAE regulator to establish a legal framework for this.