Qatar Stock Exchange and Edaa Qatar as part of their market development efforts, oversaw the first ever onshore securities lending and borrowing transaction in Qatar. HSBC acted as custodian and agent lender for this transaction while QNBFS acted as the borrower.

According to Qatar Stock Exchange, the transaction marks a key milestone for the 3rd Financial Sector Strategic Plan (3FSS) launched by the Qatar Central Bank in November 2023, which aims to further develop the financial sector in Qatar as part of the Qatar National Vision 2030.

3FSS includes capital markets as one of its central pillars of putting in place the market access infrastructure and a regulatory environment aligned with that in developed markets to further increase the size and liquidity of the Qatari market.

Abdulaziz Al Emadi, Acting CEO of Qatar Stock Exchange, say: “This marks the beginning of a new era for QSE as this will allow investors and traders to execute sophisticated investment strategies, hedge their portfolios as well as gain access to securities financing in the local market. This unlocks a significant liquidity pool and should help attract new types of investors in the Qatari market. We are grateful to our partners in this transaction and especially to QFMA and Edaa for their support and cooperation.”

Edaa Qatar has played an instrumental role in enabling this transaction for the Qatari market. Its CEO Sheikh Saif bin Abdullah Al-Thani added, “With this first of its kind transaction in Qatar, Edaa is proud to enable the market infrastructure to conduct such value-added transactions for its customers. We will continue to work with our customers to further develop the use of securities lending and borrowing for securities financing purposes.”

With this transaction, HSBC celebrates its long-standing partnership with QSE starting in 2004 when the country opened for foreign investment into its equity markets.

Abdulhakim Mustafawi, CEO HSBC Qatar, says: “With our on-the-ground expertise and deep local knowledge, we’re proud to have structured this transaction. We expect this will help attract more investors into the Qatari market and therefore help us connect global clients with opportunities in Qatar and vice versa, as we have for over 70 years.”

Adnan Hussain, global head of agency securities lending, HSBC, comments: “Qatar’s opening up of its capital markets to securities lending for the first time not only allows us to help asset owners receive potentially higher returns from their Qatari equity investments, but also facilitates more liquidity into the market and enhance price discovery.”

“As the market maker of a more than 30 Qatari equities, QNBFS is proud to be engaged in the first of its kind transaction on QSE. It was the first securities lending transaction in the Qatari market, shall improve the efficiency of our market making activity. We further plan to offer this to our qualified investor clients that can benefit from new trading strategies on QSE that were not possible before,” adds Maha Al Sulaiti, Acting CEO, QNBFS.

QSE, QFMA and Edaa have worked hand in hand for consistent enhancements to the regulatory framework and market infrastructure, along with the publication of new rules and procedures relating to securities lending and borrowing effective March 25th, 2024, when the market shortened its settlement cycle from T+3 to T 2.

A well-functioning securities lending and borrowing activity along hedging tools including derivatives is a key criterion for developed market status by international index providers such as MSCI and FTSE Russell.

Source: Qatar Stock Exchange