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10:00
01 january 2014
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Procedures for Executing a Pledge on DFM Listed Securities

Details
  • Pledging Securities: It is preserving securities in a special account known as (MEMBER X) according to an official request from Banks and Financial Institutions with the consent of the investor.
  • Release of Pledged Securities: In the case of releasing pledge, once the Pledgor Member has paid the entire commitments, the pledge bank sends an official letter to the CSD Division Head informing them of the release of the Pledged Securities and the investor will have full rights and control over these securities.
  • Transfer of Pledged Securities to Broker for Sale: In case the investor and the pledge member would like to deal in the Pledged Securities and transfer them to the investor’s Pledged Securities Account with a broker certified by DFM to sell in DFM
  • Re-pledging of the Pledged Securities transferred to a broker to be sold: If the investor and the pledge member are willing to re-pledge the Pledged Securities that are transferred to the broker to be sold again, the pledge member sends an official letter to CSD Division Head advising the same.
  • Pledge Release of Transferred Securities to Broker for sale: If the investor and the Pledge Member are willing to release of transferred Pledge Securities to broker for sale from the broker account to the CSD account.The Bledge Member send on official letter to CSD Division Head advising the same. 
For more information on this service, please contact:
DFM Customer Services
T: +971 4 305 5555
E: Clearing&Settlement@dfm.ae

Fees
  • Pledge fees which are two thousands (0.002) of the security’s market price or two ten thousands (0.0002) in the case of bonds (number of securities x last closing price x 0.002), noting that the minimum pledge fees are AED 100 for per company.
  • The fee for the release/transfer of Pledges Securities to the broker for sale/re-pledging of the securities transferred to the broker for sale is AED 100 for each per company
  • The fee for the  re-pledging of transferred Pledged Securities to the broker for sale is AED 100 for per company
  • The fee for the Releasing of transferred Pledged Securities to the broker for sale from the broker account to CSD account is AED 100  per company.

Procedures

Pledge:

  1. DFM will send the Voucher Receipt.
  2. Sending a confirmation letter confirming the pledge to the Pledgee Member with the fees voucher to the Pledgee Member.
  3. Payment of fees.

Release of Securities:

  1. Payment of fees.
  2. Sending a confirmation letter confirming the release of the pledge and attached with the fees voucher to the Pledge Member.
  3. DFM will send the Voucher Receipt.

Transfer Pledged Securities to a Broker for Sale:

  1. DFM will send the Voucher Receipt.
  2. Formal letter to the broker confirming the transfer of Pledged Securities to the special account with them to sell the securities and transfer the proceeds to the Pledgor account with bank, with a copy of the Pledge Member, and the Broker carrying the full responsibility towards it.
  3. Formal letter to the pledge member confirming the transfer of the Pledged Securities to the broker for sale enclosed with a copy of the letter sent to the broker and the original receipt of the fees.
  4. Payment of fees.

Re-pledging of the Pledged Securities transferred to a Broker to be Sold:

  1. Payment of fees.
  2. Sending a confirmation letter confirming the Re-pledged to the Pledge Member
  3. DFM will send the Voucher Receipt.

Pledge Release of Transferred Securities to Broker for sale:  

  1. Payment of fees.
  2. Sending a confirmation letter confirming the Release to the Pledge Securities Transferred to Broker for sale to Pledge Member 
  3. DFM will send the Voucher Receipt.



Required Documents

Pledge: 

  1. An official letter from the pledge bank addressed to the head of CSD division indicating the following:
    • Name and number of the investor whose securities are pledged in favor of the bank
    • Name of the joined bond company and number of pledged securities
    • Date of pledge
    • Duration of pledge (if any)
    • Designating the quota of the securities cash or equity earnings
  2. A letter from the investor to DFM authorizing the bank to pledge their securities. It is to include all of the aforementioned data as indicated in the pledge bank’s letters and to be identical to it.
  3.  A letter from the pledge member specifying the authorized signatories concerning   pledge, release, pledging the securities to the broker for sale individually, with a copy of the authorized signatories’ signatures.

Release of Securities:

  1. The pledge member sends an official letter to the CSD department's Head requiring the release of the pledged securities.

Transferring Pledged Securities to a Broker for Sale:

  1. An official letter is sent to the CSD Division Head advising that both the investor and the pledge member would like to transfer the pledged securities to the investor’s account concerning pledged securities with a broker.

Re-pledging Pledged Securities Transferred to a Broker to be Sold:

  1. An official letter is sent to the CSD Division Head advising the re-pledging of the securities transferred to a broker for sale.

Pledged Releases of Transferred Securities to a Broker for Sale:

  1. An official letter is sent to the CSD Division Head advising to release of the transferred pledged securities to broker for sale from the broker account to the CSD account. 




How to Apply?
In person at the DFM Clearing and Settlement Department, Trading Floor, World Trade Centre, Dubai

FAQs

The pledgee bank may apply to the Court to issue an order of sale and submit such an order to the DFM stating therein, the investor's name, investor's number, the name of the security and the number of securities pledged in favor of the pledgee bank.