Short Selling

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.

Fees

 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.

Short Selling Rules as per Stock Markets

 

ADX Technical Short Selling Rules

  •  Client will sign an agreement with Broker for ADX short selling.
  • Client must deposit cash initial margin of 50% to be maintained at 30% level.
  • Client has to cover any short position within maximum T+2 of opened position with cutoff time 1:00 p.m
  • Market will provide list of available shares for short selling and update it from time to time upon Market discretion.
  • Uptick rule apply, as any short position must be placed at minimum last trading price.
  • Any share drop 5% from his last closing price will be suspended from short selling on that Day and the day that follows. Only short sellers are allowed to cover their opened positions during this period.
  • If total shares shorted reached 10% of its capital, market will suspend short selling activities on this shares.

Shares Approved for Technical Short Selling

ADX Condition Met Symbol
Turnover ratio METHAQ
ESHRAQ
MANAZEL
SUDATEL
RAKPROP
DANA
The presence of a market maker ADCB
FAB
ETISALAT
ALDAR

Please check the agreement for Al Safwa Mubasher ADX Short-Selling here 

DFM Regular Short Selling Rules

 

  • Securities Lender has to sign a Lending agreement with the Broker (main Borrower), specifying the interest and term of the agreement.
  • Broker (main Borrower) will sign an agreement with client (Sub Borrower) who wish to open short position.
  • Broker (main Borrower) will deposit the required shares in clients’ (sub Borrower) CSD accounts.
  • Clients’ (sub Borrower) must deposit 50% cash initial margin to be maintained at 30%. Margin deposited in addition of Sale Proceeds will be kept in their Short Selling cash accounts with the Broker as collateral.
  • Accrued interest, Market’s fees and corporate actions on the borrowed shares will be posted against the Sub Borrowers’ initial margin.
  • Market will provide list of available shares for short selling and update it from time to time upon Market discretion.
  • Uptick rule apply, as any short position must be placed at minimum one tick above last trading price.
  • Sub Borrower has to cover his short position at the end of the agreement term or upon lender request.

US Short Selling Rules

  • Client will sign an agreement with Broker for US short selling.
  • Broker will provide list of available shares for short selling and update it from time to time upon his available Balances.
  • Client must deposit cash initial margin of 100% to be maintained at 60% level.
  • Accrued interest, Market’s fees and corporate actions on the borrowed shares will be posted against the Borrowers’ initial margin.
  • %. Margin deposited in addition of Sale Proceeds will be kept in clients’ cash accounts with the Broker as collateral.
  • Uptick rule applies
  • Market may suspend short selling on the exchange on certain securities due to volatility or special circumstances at its discretion.
  • Clients will have to pay a borrowing fee for the securities borrowed
  • Clients may be requested to cover the position at the lenders request
  • Clients cannot have long and short positions on the same security at the same time

Placing Orders

Order Ticket:

Using Mubasher PRO:

Placing Short-sell order:

  1. Check your Short selling power
  2. Pick the share you want to short sell
  3. Write the quantity of shares
  4. Put the price that must be one up tick then last price
  5. Press sell short button
Shortsell_pro

Placing Buy-to-cover Order:

  1. check the quantity Shorted
  2. Write the quantity you want to cover
  3. Put the price
  4. Press buy to cover button
But-to-cover_pro

Using Mubashertrade Plus:

Placing Short-sell order:

  1. Check your Short selling power
  2. Pick the share you want to short sell
  3. Write the quantity of shares
  4. Put the price that must be one up tick then last price
  5. Press sell short button
MTP_Short-sell

Placing Buy-to-cover order:

  1. check the quantity Shorted
  2. Write the quantity you want to cover
  3. Put the price
  4. Press buy to cover button
MTP_But-to-cover

Order List

Check your short selling orders from Order List screen

MubahserTrade PRO

Order-list_pro

MubasherTrade Plus

Order-list_mtp

Account Summary

MubahserTrade PRO:

account-summary_pro

MubahserTrade Plus:

account-summary_MTP

Portfolio

MubasherTrade Pro:

Portfolio_pro

MubasherTrade Plus:

Portfolio_mtp