Nasdaq Dubai to Move to New Platform

All equities traded on the Nasdaq Dubai exchange will move over to a new platform starting on June 27, the company said Friday.

The move, it said, is a result of the exchange’s acquisition by the Dubai Financial Market.

DFM acquired a majority stake in Nasdaq Dubai — known as the Dubai International Financial Exchange until it was acquired by Nasdaq OMX in 2008 — last week.

The equities will trade on the DFM’s own X-Stream platform. However, they will continue to be listed on Nasdaq Dubai. Clearing, settlement and custody functions will also move over, but derivatives will continue to be traded on Nasdaq Dubai.

“This new structure will create the same look and feel for trading on both of Dubai’s exchanges, which will stimulate trading of NASDAQ Dubai equities by DFM’s 552,000 retail and other investors,” said Jeff Singer, Chief Executive of NASDAQ Dubai, in a statement.

Although the exchange saw its trading volumes double since the start of this year, it was from a low start — Nasdaq Dubai currently lists only a dozen equities.

“It wasn’t living up to their expectations, and they cut their losses short,” said Sang Lee, an analyst at Boston-based research firm Aite Group.

Consolidating the trading on a single technology platform makes sense, he added.

“You’re trying to get your costs under control,” he said. “What’s the point of having two exchanges on two different platforms?”

Meanwhile, Nasdaq OMX’s remaining stake will allow the company to continue to main a presence in the region, he added.

According to the initial $121 million agreement between the two companies announced in December, Nasdaq OMX would retain a 1 percent stake in DFM.

DFM is a natural market leader and brand name in the area, added Tower Group analyst Robert McDowall.

“Nasdaq would always suffer from some barriers in the region because of its US pedigree,” he said.

The DFM and Nasdaq Dubai will continue to be regulated separately, even as they now share technology and back office functions. Singer will stay on to run Dubai Nasdaq, the company said.

DFM is owned by the government-controlled Burse Dubai Limited.