AED 36.5 billion in credit facilities provided to investors during 1st quarter of 2017

ABU DHABI, — The total value of margin trading facilities provided by brokerage companies operating at ADX and DFM amounted to AED 36.5 billion during the first quarter of 2017, an increase of 46 percent over the same period in 2016.

According to official statistics, the margin trading accounted for 27.8 percent of the total transactions conducted at ADX and DFM during the period from January till March 2017, which totaled AED131 billion.

The DFM accounted for the largest share of margin trading, reaching AED29.44 billion, which is equal to 30.55 percent of the total cash inflows to the market since the beginning of the year, valued at AED 96.44 billion.

There is a continual demand over margin trading facilities despite the fluctuations witnessed by financial markets over the past three months, according to market brokers, who added that real estate and banking shares are the top performers in this kind of credit facilities.

Brokerage companies have called for increasing credit facilities provided to traders after it has transpired that such facilities reflect positively on trading sentiments when incentives are not up for grabs.

Under the current terms and conditions, the total finance a brokerage company is permitted to trade by margin is 300 percent of its total and additional paid-in capital. The total margin trading financing given to a client should not exceed 10 percent of the total funds allocated to margin trading by a brokerage company, as per the criteria endorsed by the Securities and Commodities Authority, SCA, in this regard. Collaterals are required for extended facilities, according to the SCA resolution issued in the year 2008.

The month of January witnessed the highest levels of margin trading facilities, amounting to more than AED 17 billion at ADX and DFM, while March saw the lowest level.

Source: Emirates News Agency