Dubai Financial Markets To Buy Rival Nasdaq Dubai

In an effort to cut costs in the wake of Dubai’s ongoing debt crisis, back office functions will merge, but exchanges will remain separate.

Stock market operator Dubai Financial Markets said it will buy its local rival Nasdaq Dubai for $121 million in an effort to cut costs and restructure its business in the wake of Dubai’s ongoing debt crisis.

The deal will enable the firm to combine back office functions, such as custody and clearing, but the two exchanges will continue to be operated separately, according to a MarketWatch report.

The two exchanges - both of which operate on Nasdaq OMX trading platforms - said the integration of their exchange technology will allow them "to benefit from cost synergies and to provide enhanced functionality and participant access".

In a statement the Dubai Financial Markets said it will pay $102 million in cash and 40 million shares to Borse Dubai and Nasdaq OMX, the joint owners of Nasdaq Dubai.

“The combination of the two Dubai exchanges has long been seen as a preferred way forward," Adena Friedman, chief financial officer at Nasdaq OMX, said in a release.

"It will create greater efficiencies from a systems perspective, enabling retail investors to better access Nasdaq Dubai and providing issuers with a choice of commercial and regulatory structures," Friedman added.

Nasdaq Dubai will continue to use the Nasdaq brand and technology, while Nasdaq OMX will also retain the right to appoint one board member at Nasdaq Dubai.

"The combined strengths of the two exchanges will help attract new issuers, from across the region and internationally, who will be able to choose which of the two exchanges is appropriate for them according to their commercial and regulatory preferences," Jeff Singer, CEO of Nasdaq Dubai, said.

The two exchanges have different regulatory regimes and companies listing on the Nasdaq Dubai market can opt to list in dollars as well as the United Arab Emirates dirham.

"Through the ownership structure and closer operational links between the two exchanges, Dubai will achieve its goal of creating a powerful capital markets hub for the Gulf Cooperation Council and the wider Middle East," he added.

Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in April 2007, Melanie lived in Paris, where she worked for the International Herald ... View Full Bio