In addition to being currently the only SCA-licensed Securities Lending and Borrowing Agent, NBAD is the UAE's first licensed custodian bank and first and only official market maker since April 2014.
For clients choosing to participate in the program, securities lending and borrowing transactions facilitate the temporarily transfer of the title of their securities to NBAD as a borrower for use in market making activities.
The UAE market regulator, the Securities and Commodities Authority (SCA), approved regulations for securities lending and borrowing
in October 2012 but exchanges have taken considerable time to introduce the practice, partly because of concern about causing instability.
In the initial phase, securities lending and borrowing
activities will be limited for market making activities and for settlement of failed securities delivery for DVP trades.
All Securities lending and borrowing
contracts will be forced to be released on the working day before the start of a spot period relating to that security, lenders and borrowers shall not lend or borrow securities during the spot period.