Jeff Singer, the chief executive of Nasdaq Dubai, has called on Tuesday for a radical revamp of the UAE’s stock markets to “create an underpinning for long-term growth” of the national economy.
The plan, which has been presented to the exchange’s board, aims to produce a “road map” for solving the problems facing the country’s markets.
Despite rising prices and volumes this year, the three markets in Dubai and Abu Dhabi have underperformed most global indicators since 2008.
Mr Singer said the aim was to produce structural reforms similar to the 1986 “Big Bang” revolution in London that opened up the UK’s markets to international investors.
He stopped short of an all-out call for unification of the three exchanges in the UAE – Nasdaq Dubai, the Dubai Financial Market and the Abu Dhabi Securities Exchange.
“I am an exchange official. Unification is a political issue that needs to be made at a higher level,” he said. “But markets should be fostering scale before they foster competition. Anything we can do to make capital markets as big as possible will help the investor and the broker.”
His plan calls for the setting up of a national task force under the auspices of the federal Ministry of the Economy to bring together market professionals, regulators and the authorities to steer through his proposals.
“I’m sure UAE policymakers understand how important this is for the national economy.”
More controversially, he called on companies in the Emirates to think again about flotation on overseas markets, rather than at home, to prevent what he calls the “outsourcing” of the UAE’s capital markets.
The Abu Dhabi healthcare company NMC Health recently attracted criticism for its decision to go for a listing on the London Stock Exchange rather than in the UAE.
“No emerging market allows companies to go international before they go local. It’s not in the national interest. I think the UAE should do the same,” said Mr Singer, who has been Nasdaq Dubai’s chief executive since 2008. He also called for specific measures to be taken to boost UAE markets and liquidity in stock trading.
He wants the authorities to accelerate the flotation of government-owned companies on local markets in a full privatisation programme, and further improvement in the system of settlement of share trades to allow UAE markets to gain entry to the “emerging markets” status of MSCI.
He would like the authorities to encourage the creation of a local pool of investors to add to liquidity via the setting up of stabilisation funds and a pension fund industry.
Mr Singer’s proposals are likely to revive the debate over the existence of three separate exchanges in a country the size of the UAE.
Goldman Sachs, a United States investment bank, has worked on a plan to merge the three, but no definite proposals have emerged.