ASSIGNMENT

Assignments

Assignment

1- Dubai Financial Market (DFM)

Background

Dubai Financial Market (DFM), which commenced operations in March 2000, is a secondary market for the trading of securities issued by public shareholding companies, bonds issued by the Federal or any local government and public institutions, units of investment funds and any other financial instruments. The exchange operates a fully automated screen-based trading system with a central order book (to match buying and selling orders) and has a central securities depository and clearing and settlement house.

During 2006, the DFM initiated partial conversion to create the first ever Islamic market this move was aimed at attracting all domestic and international investors keen on complying with Shariah law. Meanwhile, the exchange will continue to offer conventional services and maintain separate accounts and disclosure procedures to meet the requirements of nonShariah compliant customers.

Founded by the Dubai Government, DFM was the first stock exchange in the Middle East to be privatised. Its shares started trading on its own platform on 7 March 2007.

Paid-In Capital And Shareholders

The DFM is operating as a secondary market for trading of securities issued by public joint-stock companies, bonds issued by the Federal Government or any of the Local Governments and public institutions in the country, units of investment funds and any other financial instruments, local or foreign, which are accepted by the Market. There are about 57 companies listed (as of August 2007) on DFM, most of them are UAE-based companies and a few dual listings for companies based in other MENA region countries. Many companies allow foreigners to own their shares.During 2004 and 2005, there were significant increases in the volume of shares traded and the share prices of many companies. However, towards the end of 2005 and through the first few months of 2006 the bubble has burst and share values dropped by around 60% on DFM, along with similar decreases in most other Persian Gulf stock markets.

DFM is one of three stock exchanges in the UAE. Abu Dhabi Securities Exchange (ADX) also lists mostly UAE companies and the recently opened Dubai International Financial Exchange (DIFX) was set up to trade international stocks. DFM is majority owned by Borse Dubai, with 20% of the DFM's shares listed on the DFM platform.

Revenues

DFM's total revenues grew 4.9% y-o-y to AED827.3m in FY07. This was mainly due to an increase in trading value and higher trading volumes. During FY07, trading commission fees accounted for 95.66% of total revenues. Ownership transfer and mortgage fees, and brokers' fees accounted for 1.6% and 2.4% of the top line, respectively.

DFM's total revenues grew 58.9% y-o-y in H1 FY08 to AED453.7m due to an increase in trading value and volumes which, in turn, resulted in higher trading commission fees. During H 1 FY08, trading commission fees accounted for 93.1 % of total revenues followed by ownership transfer and mortgage fees (33%), brokers' fees (23%) and other fees (12%)

Transactions Cost

DFM's revenues from this segment depend on the value of all trades conducted on the ...