Two more brokerages suspend operations

Brokerages suffer from weak trading volumes.

The Dubai Financial Market.

Two more stock brokerages have suspended operations in the UAE, bringing the total number of financial services companies operating to 70 from 90 last year.
Brokerages are suffering from depressed trading volumes on the country's bourses, exacerbated in recent weeks by unrest in parts of the Mena region, which has driven away investors.
The Dubai Financial Market General Index has lost 15.9 per cent since protests began in Tunisia, while the Abu Dhabi Securities Exchange General Index has lost 5.9 per cent over the same period.
Dubai Tadawul, a subsidiary of Dubai Bank, received approval to suspend its activities for up to six months while the company undergoes restructuring.
"The market is not doing well right now," said Asim al Ali, the general manager at Dubai Tadawul. "We applied to the Securities and Commodities Authority [SCA] to suspend our activities, and they were in agreement and just wanted to make sure investors would be taken care of, and that no client has money or shares owed.
"We took it as an opportunity to make our upgrades so that when markets pick up we will come back strong and the markets has begun to show signs of improvement." The brokerage is assisting clients by referring them to other brokers, Mr al Ali said.
Electronic Stock Brokerage also requested to suspend trading and is in negotiations on merging with several brokerages.
"Its really about bringing down costs," said Moaz al Jundi, the operations manager at Electronic Stock Brokerage in Abu Dhabi. "Given the market conditions, all the brokerages are looking to find ways to reduce overheads and the regulator is encouraging us to merge."
The company recorded a Dh5.5 million (US$1.4m) loss for last year, compared with an Dh11m loss for 2009.
Essham Securities, based in Dubai, is considering suspending its trading activities but no firm plans have been made.
The regulations and procedures for closure are so strict that most brokerages will find challenges in meeting the requirements, said Amani Mohamed, the operations manager at Essham Securities in Dubai.
Essham, which posted a loss of Dh2.6m for last year, closed its branch at the Dubai Financial Market in November in an effort to reduce costs, Ms Mohamed said. The company recorded a loss of Dh1.2m in 2009.
The SCA last month introduced a ruling that limited the length of time a brokerage could be suspended to six months. Previously the limit had been one year.
Prime Emirates, the UAE subsidiary of the Egyptian financial services company Prime Holding, said it had stopped trading operations and was planning to shut down.
 
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