QE launches new schemes for liquidity, price stability

 The QE has also launched a securities and lending borrowing (SLB) scheme, enabling settlement of securities sold short, as well as “sponsored access”, allowing sponsoring members to provide eligible customers with direct access to the trading system of the bourse.

By Santhosh V Perumal/Business Reporter

Qatar Exchange has launched liquidity providers (LP) scheme, in what could pave way for enhanced liquidity and greater price stability of admitted stocks.

Besides, the bourse has also launched securities and lending borrowing (SLB) scheme, enabling settlement of securities sold short, as well as “sponsored access”, allowing sponsoring members to provide eligible customers (sponsored participants) with direct access to the trading system of the bourse.

The LP scheme, which has been launched for the QE 20 Index constituents, is now open for members. An LP is an underwriter or a market maker that is a sizable holder of a given security or that facilitates the trading of the security, providing greater price stability and distribution of the securities to both retail and institutional investors.

Under the scheme, LPs will have an obligation to provide double-sided (bid/offer) orders in the relevant security (or securities) subject to minimum presence requirements and in accordance with agreed spreads and sizes.

As a condition to become active as an LP, members need to obtain a licence from the Qatar Financial Market Authority (QFMA). The exchange may enter into one or more agreements whereby one or more members assume the role of LP for the relevant admitted security. The bourse will determine the minimum and maximum number of LPs for the relevant admitted security.

They will enjoy a rebate on trading fees, provided that the obligations are met. Within the price/origin/time matching algorithm of the central order book, LP orders will be treated with the same origin priority as client orders.

The minimum rebate has been fixed at 5% and the maximum at 75% depending on the volumes.

Any trading business executed by the member in its capacity of LP will be strictly segregated using a separate NIN (national identification number) account which will be opened for the sole purpose of liquidity providing.

In addition to the LP agreement (with the bourse), they also would have to enter into a liquidity provisions contract, approved by the exchange, with the issuers.

The licensing process for LP requires the candidate to be provisionally nominated by the QE and the LP application needs to be submitted to the bourse, along with the supporting documentation, the most important of which are the business plan, a functional description of systems that are used to support the LP activity, an updated organisational chart of the company, the internal controls used in the practice of the LP activity and how risk management relative thereto is organised so as to cover segregation of the LP (own account) business and client business.

On the SLB scheme, the spokesman said the facility can be used as an alternative pool of securities by LPs that have committed to make markets on the QE. In addition, the facility will be open for all market participants as a mechanism to prevent settlement failures.

Regarding the “sponsored access,” the bourse said the sponsoring member will be fully responsible for all business executed by the sponsored participant, including but not limited to trade execution and trade settlement under the sponsoring member’s bank guarantees.

The “sponsored access” is open for domestic and non-domestic clients and to be eligible, the clients need to be licensed as a financial services firm. In the case of overseas clients, the licence in the country of origin should be at least equivalent to a locally issued license, as determined by the QFMA.

Profit-booking continues to drag Qatar bourse

By Santhosh V Perumal/Business Reporter

 Substantial profit-booking, especially by foreign institutions, yesterday dragged the Qatar Exchange (QE) for the second day.

Domestic institutions’ strong buying support notwithstanding, the 20-stock QE Index (based on price data) fell 0.47% to 8,693.21 points.

Banking stocks were the influential drag in the market, which is up 4% year-to-date (YTD).

Telecom, industrials, transport, consumer goods and banking sectors outperformed the index by gaining 11.08%, 6.48%, 6.42%, 5.80% and 4.35% YTD respectively.

More than 52% of the stocks were in the red with major shakers being Doha Bank, Commercialbank, Industries Qatar (IQ), Gulf International Services and Nakilat; even as Mazaya Qatar and Barwa bucked the trend.

The 20-stock Total Return Index also shrank 0.47% to 11,923.19 points, the All Share Index (comprising wider constituents) by 0.27% to 2,120.29 points and Al Rayan Islamic Index by 0.19% to 2,570.38 points. All the three indices factored in dividend income as well.

Under the All Share Index category, the insurance index tanked 0.99%, followed by banks and financial services (0.52%), industrials (0.35%), consumer goods (0.33%) and transport (0.14%); while the indices of telecoms and realty gained 1.16% and 0.51% respectively.

Market capitalisation eroded 0.27%, or more than QR1bn, to QR472.31bn with mid, small and micro cap equities melting 0.88%, 0.60% and 0.33% respectively.

Mid, large and small cap equities have gained 3.96%, 2.92% and 0.95% YTD respectively; while micro caps have lost 1.43%. Of the 42 stocks, only 12 advanced, while 22 declined, three were unchanged and five were not traded.

Foreign institutions turned net sellers to the tune of 22.12% or QR78.85mn. A much lower 20.62% of them bought equities compared to 31.56% last Thursday, whereas a much higher 42.74% offloaded against 24.41%.

Domestic institutions’ net buying surged to 12.30% or QR43.85mn. A higher 33.76% of them were into buying compared to 26.68% the previous trading day, while a lower 21.46% of them into selling against 23.53%.

Qatari individual investors turned net buyers to the extent of 8.69% or QR30.98mn. A higher 33.90% of them purchased equities compared to 29.22% last Thursday, whereas a much lower 25.21% sold against 39.99%.

Non-Qatari retail investors’ net buying was up to 1.12% or QR3.99mn. A marginally lower 11.72% of them bought equities compared to 12.54% the previous day and a lower 10.60% sold against 12.07%.

Total trading volume fell 9% to 6.61mn shares, while value gained 33% to QR356.48mn, but deals were down 1% to 3,449.

The transport sector’s trading volume plummeted 61% to 0.72mn shares, value by 52% to QR17.01mn and transactions by 54% to 322.

The real estate sector’s trading volume plunged 56% to 0.67mn shares, value by 61% to QR12.13mn and deals by 41% to 299.

The telecom sector’s trading volume tanked 53% to 0.08mn shares, value by 69% to QR3.19mn and transactions by 25% to 85.

The consumer goods and services sector’s trading volume declined 29% to 0.15mn shares, value by 33% to QR15.71mn and deals by 19% to 235.

However, the industrials sector’s trading volume more than doubled to 1.37mn shares and value also more than doubled to QR167.86mn on a 79% jump in transactions to 1,051.

The banks and financial services sector’s trading volume surged 30% to 3.55mn shares, value by 28% to QR137.31mn and deals by 14% to 1,408.

Although the insurance sector’s trading volume was flat at 0.07mn shares, value gained 13% to QR3.27mn and transactions by 2% to 49

Actively traded stocks (in terms of volume) were Qatar Oman Investment (1.14mn shares); IQ (771,353); Nakilat (606,155); Masraf Al Rayan (507,070) and Doha Bank (475,801).

In the debt market, there was no trading of treasury bills.