Dubai Financial Market (DFM), the exchange subsidiary of government-owned holding company Borse Dubai, has agreed a deal to purchase Nasdaq OMX’s stake in Nasdaq Dubai.
As a result, Nasdaq Dubai will become a wholly-owned subsidiary of DFM, Dubai’s long-standing domestic exchange. In return for its one-third stake in Nasdaq Dubai, Nasdaq OMX will receive a 1% ownership interest in DFM and retain the right to appoint one director to the exchange. As of 21 December 2009, Nasdaq OMX’s 1% stake in DFM is valued at $39 million.
Nasdaq Dubai will continue to act as a separate exchange under the DFM’s ownership and the technology and trademark licensing agreements will remain unchanged. Nasdaq Dubai currently has 26 members split between international and regional companies. The exchange currently lists equities, equity derivatives, Dubai gold securities, structured products, Sukuk (Islamic bonds) and conventional bonds.
The two exchanges have agreed to integrate their technology platforms to benefit from cost synergies and provide enhanced functionality and participant access. According to Nasdaq Dubai, the new structure will enable DFM and Nasdaq Dubai to benefit from each other’s regional and international strengths, creating a “unique” capital markets hub in the Gulf Cooperation Council (GCC) countries.
“The combination of the two Dubai exchanges has long been seen as a preferred way forward. 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,” said Adena Friedman, chief financial officer, Nasdaq OMX and board member, Nasdaq Dubai. “We remain committed to participating in the development of the capital markets in the GCC region and we believe that this transaction will enable Dubai to structure the financial markets for future growth.”
Nasdaq OMX took a one third stake in the exchange, previously known as the Dubai International Financial Exchange, in February 2008. Nasdaq Dubai is currently valued at $120 million.