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UAE to launch new market to trade private firm shares

THE LEVANT – A second financial market, which will exclusively trade shares in private companies, is set to start operating in the UAE within the next few months

Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister and ruler of Dubai, has approved the Second Market plans after being briefed on the project submitted by the Securities and Commodities Authority, news agency WAM reported on Tuesday.

It said that Sheikh Mohammed has directed that trading should begin “over the next few months”. WAM’s article did not give details about how trading on the market would work.

Sultan bin Saeed Al Mansouri, Minister of Economy and chairman of the Securities and Commodities Authority, said the launch of the second market would recognise “the significance of both the public and the private joint stock companies in building the country’s economy”.

He said: “The launching of the second market, which is solely for trading of shares of private companies, is part of the SCA’s comprehensive strategy aimed at achieving leadership in developing the financial markets and in contributing to the development of the national economy according to the best international standards and practices.”

The minister said that the private joint stock companies from across the Gulf and Arab world would be able to list on the second market.

The move follows that of US stock exchange NASDAQ which opened its private company marketplace earlier this year to let growth-stage companies tap institutional investors for capital and employee liquidity.

They’re part of a growing number of players like SecondMarket, AngelList, Funders Club, WeFunder and Equidate that allow private companies to raise capital from a broader number of investors beyond traditional venture capital firms.

Abdullah Al-Turifi, CEO of the SCA, said that he expects the second market to “add more value to the market, the companies and the investors alike”.

Al-Turifi said the listing of private joint stock companies will help those firms overcome problems of raising finance.

“The second market concept hinges on the listing of stocks of private joint stock companies on a market set up inside all the markets in the country, where there will be trading, clearance and settlement operations on a separate screen other than the official screen of the main market,” WAM added.

The SCA said it studied a number of advanced international markets in Europe and the United States before finalising its plan for the second market.

A committee, comprising the SCA, the Abu Dhabi Stock Exchange and the Dubai Financial Market, was set up to coordinate efforts to draft a regulation for a second market in collaboration with a consultancy firm.

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