Nasdaq Dubai plans platform for bond trading

By bne IntelliNews May 28, 2013

Nasdaq Dubai will launch a platform allowing investors to trade both Islamic and conventional bonds, the bourse said in a statement. Tradable securities will initially include at least 12 sukuk, or Islamic bonds, and conventional bonds that are listed on the bourse, with a nominal value of USD 10.9bn.

Trades will be automatically routed for settlement at Euroclear Bank and the platform will be available to high-net worth and institutional investors, Nasdaq Dubai said. The platform will be opened gradually over the coming weeks.

"The new platform is a natural extension of Dubai's existing role as a centre for sukuk and bond issuance and listing," said Essa Kazim, chairman of Bourse Dubai, the holding company for Dubai’s stock markets. "Nasdaq Dubai will offer an efficient trading venue to participants from the region and around the world, providing fresh impetus to the growth of the capital markets in the UAE and the region," he added.

Prices for Nasdaq Dubai-listed sukuk and bonds will be visible to traders simultaneously on a screen-based system through the exchange. This will reportedly boost transparency and efficiency in the secondary market and promote liquidity. Currently bonds and sukuk are only tradable through lenders offering investors different trading structures and prices, known as ‘over-the-counter’ trading.

Nasdaq Dubai will see the listing of billions of dollar worth of Islamic bond (sukuk) over the next two years, helping the bourse become the world's largest sukuk market by end-2014, acting CEO Hamed Ali said in March 2013. London's LSE currently top the list with USD 27bn worth of listed sukuk followed by Malaysia at USD 23bn and Nasdaq Dubai third at USD 10.9bn, according to industry estimates.

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