On 8 September 2022, QAT FMA issued short selling and securities lending rules.
- QAT FMA issued covered short selling rules under Board Decision No. 5 of 2022.
- Also issued securities lending and borrowing rules under Board Decision No. 4 of 2022.
- Added new financial services activities to increase business of financial services firms.
- Firms may provide investment alternatives, encourage trade of non-traded securities.
Covered Short Selling Rules
- Specified that A covered short sale may be undertaken by a market maker, a liquidity provider, a qualified investor, or any other case where QAT FMA provides approval.
- Covering the covered short sales on the liquidity date is via borrowed securities, or securities subject to lending and borrowing arrangements issued by the Authority.
- Also, lending and borrowing agreement signed between lender and the borrower.
- Decision also provided terms and procedures for covering a short securities position.
- The market shall determine which securities are accepted for covered short selling in accordance with the criteria set by the market and approved by QAT FMA.
- Provided provisions on obligations of parties, required disclosures, among other topics.
Securities Lending, Borrowing Rules
- Prohibited activity of lending, borrowing securities without a lending/borrowing agent.
- Agent must be licensed by QAT FMA; specified registration requirements, agent duties.
- Listed permissible purposes for lending/borrowing securities, including to invest in cash guarantees, establishing index fund units, executing short selling transactions, others.
- Decision also provided terms and procedures for securities lending and borrowing.
- Only qualified investors may enter transactions; unqualified investors may request from the agent to act on their behalf to enter into a lending or borrowing transaction.
- Decisions 4 and 5 of 2022 are effective immediately upon their issuance.