Keeping its role as pioneer in the financial services industry, Al Safwa Mubasher Financial Services is the leading Brokerage House in UAE to provide Investors in Dubai Financial Market, Abu Dhabi Stock Market and US Stock Markets with short selling.
How it Works
Short selling makes it possible to sell what one does not own. This is a key concept, but how, you might ask, is this possible? In simple terms, you execute a short sale by selling the security you wish to short sell at the current market price. If and when the price of the security declines, you buy it back and return it to “cover” your short sale. The difference between the price at which you sold the asset and the price at which you bought it back represents your gross profit or loss.
Benefit for Lender
the lender is compensated in the form of agreed-upon fees and also has the security returned at the end of the transaction. This allows the lender to enhance its returns through the receipt of these fees in addition to any corporate actions (Cash Dividends, Bonus Shares) accrued during the lending contract.
Benefit for Borrower
Have you ever had a strong prediction that a stock was overvalued, headed for a substantial drop and wished to profit from its decline? What if a massive run-up in Stock Market leads you to believe that a significant correction is possible and you would like to make money from this view? Short selling enables you to potentially benefit from each of these scenarios.
in addition to the regular trading fees applied by each stock market, Borrower has to pay interest on the value of borrowed shares based on the daily closing prices in addition of any corporate actions that take place during the borrowing contract.