H.E. Sheikh Bandar Bin Mohammed Bin Saoud Al-Thani, the QCB Governor and the QFMA's Board Chairman, issued the Covered Short Selling Rules and Securities Lending and Borrowing Rules as a part of its regulatory and supervisory role over the Qatari capital market sector in the State.
The issuance of such new rules comes within the continuous development and update of capital market regulations and legislation, and in line with the global development of this vital sector, as well its needs at the local level.
The importance of the new rules is that they add new financial services activities aimed at increasing the volume of activities and businesses of financial services companies, raising the ability of such companies to provide various investment alternatives for market investors, and encouraging the trading of non-traded securities. This contributes to increasing trading volumes and liquidity rates in the market, maximizing the returns of investors from trading in the Qatari capital market, as well as the possibility of borrowing securities for various purposes, including settling sales transactions for which no securities are available upon settlement, establishing index fund units, executing short selling transactions, or for the purpose of returning previously borrowed securities.
Covered short selling means that any of the authorized persons (market maker, liquidity provider, qualified investor) sell securities either borrowed, or enter into borrowing arrangements, in order to close out an open short position on the settlement date in accordance with these rules.
Securities Lending and Borrowing also means that the lender transferring the title of the securities temporarily to the borrower outside the market with a differed price with commitment or promise from the borrower to return them or resell them to the lender upon his request at any time during the time frame agreed upon or at its end unless they agreed otherwise.