HSBC acted as custodian and agent lender for this transaction, while QNBFS acted as the borrower.
“This marks the beginning of a new era for QSE as this will allow investors and traders to execute sophisticated investment strategies, hedge their portfolios as well as gain access to securities financing in the local market,” said Abdulaziz al-Emadi, acting chief executive officer of QSE.
This, according to him, unlocks a “significant” liquidity pool and should help attract new types of investors in the Qatari market.
The transaction marks a key milestone for the Third Financial Sector Strategic Plan launched by the Qatar Central Bank in November 2023, which aims to further develop the financial sector in Qatar as part of the Qatar National Vision 2030.
The plans includes capital markets as one of its central pillars of putting in place the market access infrastructure and a regulatory environment aligned with that in developed markets to further increase the size and liquidity of the Qatari market.
“With this first of its kind transaction in Qatar, Edaa is proud to enable the market infrastructure to conduct such value-added transactions for its customers. We will continue to work with our customers to further develop the use of securities lending and borrowing for securities financing purposes,” said Edaa chief executive officer Sheikh Saif bin Abdullah al-Thani.
With this transaction, HSBC celebrates its long-standing partnership with QSE starting in 2004 when the country opened for foreign investment into its equity markets.
“With our on-the-ground expertise and deep local knowledge, we’re proud to have structured this transaction. We expect this will help attract more investors into the Qatari market and therefore help us connect global clients with opportunities in Qatar and vice versa, as we have for over 70 years,” Abdulhakim Mustafawi, chief executive officer of CEO HSBC Qatar, said.
Qatar’s opening up of its capital markets to securities lending for the first time not only allows HSBC to help asset owners receive potentially higher returns from their Qatari equity investments, but also facilitates more liquidity into the market and enhance price discovery, according to Adnan Hussain, global head of agency securities lending, HSBC.
“It was the first securities lending transaction in the Qatari market, and shall improve the efficiency of our market making activity. We further plan to offer this to our qualified investor clients that can benefit from new trading strategies on QSE that were not possible before,” said Maha al-Sulaiti, acting chief executive officer of QNBFS.
A well-functioning SLB activity, along with hedging tools including derivatives, is a key criterion for developed market status by international index providers such as MSCI and FTSE Russell.
