The Qatar Stock Exchange (QSE) conducted its first domestic securities lending and borrowing (SLB) transaction in May as part of its strategy to increase market liquidity. This move marked an important development for the QSE as it looks to increase market and product sophistication, depth and securities lending.
HSBC acted as custodian and agent lender, while QNB Financial Services (QNBFS) acted as borrower. The QSE partnered with Edaa, the authorized service provider under the Qatar Financial Market Authority that provides a range of essential services related to securities and financial instruments.
Hussein Fakhreddine, CEO of Qatari investment bank QInvest, said: “The transaction marks a milestone under the Financial Strategic Plan, which is part of the Qatar National Vision 2030, enabling more advanced investment strategies and unlocking a significant liquidity pool. ”
QNBFS plans to offer this service to qualified investor clients who can take advantage of new trading strategies on the QSE that were not previously possible, said Maha Al Sulaiti, acting CEO at QNBFS. As demand for such transactions increases, the country expects a commensurate growth in market volumes and liquidity.
QNBFS Chairman Adel Abdulaziz Khashabi said: “It is important to note that SLB is part of a number of key initiatives championed by the QSE to increase the size and liquidity of Qatar’s stock market. Such initiatives include encouraging new listings through initial public offerings and direct listings, the most recent example of which is Techno Q’s successful listing on the venture market. We expect further IPOs and listings to stimulate demand and market activity. Going forward, the introduction of a derivatives market should further stimulate market activity and increase our appeal to institutional investors.”
QInvest is also looking to boost its business and has aligned its investment banking advisory services with Qatar’s 2030 vision for the financial sector. Fakhreddine said: “We are and will continue to be active in the securities market in the form of active mergers and acquisitions, as well as equity and debt capital market transactions.”
The Qatar Investment Authority has allocated QAR1 billion ($275 million) for a permanent market-making program at the QSE. Fakhreddine said: “This program aims to increase market liquidity, improve price formation and diversify capital markets, thereby attracting more foreign investment and increasing investor confidence.” The initiative will run for the next five years.
The development of SLB activities alongside other market initiatives will provide traders and investors with access to more advanced investment strategies, hedging mechanisms and securities financing. It is likely to attract new investors to the Qatari market and deepen the investment pool.
