Qatar Exchange introduces sponsored access
The Qatar Exchange has introduced sponsored access and market making for the first time, in a move intended to boost liquidity and make it easier for a wider pool of investors to access the market.
Located in the capital Doha, the Qatar Exchange is in competition with other trading centres on the Persian Gulf such as Dubai and Abu Dhabi. Sponsored access will mean that domestic and international market participants can now gain direct access to the exchange via members, without necessarily holding their own membership. The effect will be to make it cheaper to access the exchange, encouraging more investors to participate. If successful, the scheme should help to increase liquidity.
The Qatar Exchange is also introducing a liquidity provider scheme, so that firms can register as market makers for the QE 20 index of securities. Introducing market making on these stocks should also help to drive up liquidity. Liquidity providers will be required to provide double-sided bid-offer orders, subject to minimum presence requirements and in accordance with agreed spreads and sizes. In exchange, the liquidity providers will get a rebate on their trading fees.
Last year, the Qatar Exchange moved to the UTP trading system used by NYSE Euronext. It also launched a special Venture Market for SMEs. The exchange is due to move to a new office in Dana Tower on the West Bay on 4 March.
However, investment in the Qatar stock market has been limited for some international investors, because index provider MSCI still rates the country as a frontier market. The main problem is Qatar’s lack of progress on removing foreign ownership limitations, the index provider said in December. Foreign investors can access just $10 billion of the Qatar index’s $125 billion market capitalisation, according to MSCI figures.