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Abu Dhabi Securities Exchange (ADX) has given approval for Pattern Day Trader (short-term trading) earlier this week. The product is available for customers through brokerage firms licensed by ADX and the Securities and Commodities Authority (SCA) based on laws set by said authorities to protect investors.
ADX made provision for Pattern Day Trader (short-term trading) in order to attract more investors to the market, increase investment volumes, and accelerate the market’s pace and vitality. As part of ADX’s commitment to its investors, the market set a range of incentives, rules and regulations to provide high rates of return to their customers. In addition, this product provides a four-fold increase on investment capital, as the return on investment increases, for up to three trading days.
One of the regulations set in place includes that the initial margin should not be less than 20% of the value of securities to be purchased in the short-term trading account. Furthermore, the trade value should not be less than AED100,000, even if the purchase order was made with a lower margin.
H.E. Khalifa Salem Al Mansouri, Chief Executive of ADX, said: “This innovation will provide a greater degree of freedom to investors of all professional orientations. The new product also adds a greater degree of variety to the suite of products available for investors.
Al Mansouri added: “The provision of this initiative is part of ADX’s effort to ensure a strong and buoyant trading environment which is fair and safe and in line with international best practices. The Pattern Day Trader is based upon a modern, forward-looking and innovative global approach to finance which has high levels of transparency.”
ADX and SCA guidelines also outline that the initial margin should be cash or securities listed on one of the UAE’s financial markets where the brokerage company has a license to trade with margin. Any proceeds should be deposited in the account designated for short-term trading.
The laws and regulations relating to this initiative ensure clear disclosure, investor protection, and rights to provide a legal and fair environment for all investors. ADX issues approvals on the brokerage firm's requests, based upon conditions, controls and technical standards set by the Exchange.
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