Dubai and Abu Dhabi are in talks to merge the two emirates' stock exchanges offering the possibility of lower costs and higher trading volumes, Financial Times reported on Tuesday. A merger between publicly listed DFM and Abu Dhabi Exchange would create a larger and more liquid platform, which would better reflect the size of the UAE economy, the Gulf's second largest after Saudi Arabia. Issa Al-Kazim, chief executive of Dubai Financial Market, said “the story has been there for a while, but it would certainly see marginal costs going down,” Kazim told reporters, adding that the trend of exchange mergers had already proved popular in European and US markets. “There have been discussions at the top levels meaning the owners of the exchanges,” he noted. DFM is 80 percent owned by Borse Dubai, an entity that is controlled by the Dubai government and Dubai Holding, a conglomerate owned by Sheikh Mohammed bin Rashid Al-Maktoum, Dubai's ruler. The ADX is owned by the Abu Dhabi government. Discussions over a possible merger have taken place for at least five years, but they may have a greater chance of success in the current environment. Over the past year, Abu Dhabi and the UAE central bank have stepped in to extend financial support to indebted Dubai. Talks at a pan-Emirates level came as the merger between DFM and Nasdaq Dubai, an international exchange which has failed to attract listings, was set to be completed in one to two weeks' time, Kazim said. Consultations with market participants about the introduction of a single trading platform were almost complete, he said. Nasdaq Dubai, an institutionally focused, dollar-denominated exchange, will continue to be regulated by the Dubai Financial Services Authority, while the DFM will remain under the control of the Emirates Securities and Commodities Authority, the federal regulator. Kazim said the merged platform would run on one technology and allow DFM traders easier access to Nasdaq Dubai. Some companies listed on Nasdaq Dubai might choose to change the currency of their listing from dollars to dirhams, he said, as many retail investors are more familiar with their domestic currency.
