DOHA: Qatar Exchange (QE) has announced its plans to allow investors to trade rights to share issues, which would let them profit from capital increases even without subscribing to them.
Rights allow their holder to subscribe to a share issue, usually at a fixed price that may be lower than the market price. To exercise rights, investors need to commit more money - but if rights are tradable, investors can simply sell them.
Qatar Exchange yesterday said that it is working closely with the market regulator Qatar Financial Markets Authority (QFMA) to put in place the selling and pricing mechanism of the rights issue as a new financial instrument in the market, in light of the QFMA regulations in this regard and the trading rules of the bourse.
“Consultations are on-going between the three parties to define the mechanisms in implementation of the respective article of the QFMA’s regulations with the aim of providing protection and flexibility to those shareholders who receive the rights to subscribe in the listed company’s capital increase.
Accordingly, the rights-holder will have the option either to exercise the rights by subscribing in the company’s capital increase, or sell the rights, fully or partially, in the market as per the QFMA regulations...”
The QE also said that the computation of the right’s theoretical price depends on the underlying share’s price, and it has an expiry date after which the rights lapse and become with no value, unless they are used in the subscription of the company’s capital increase.”
The QE will launch a campaign to introduce this new investment tool and provide investors with all supporting information needed to enable them making the decision as to whether buy or sell or keep the right, in light of the related rules and regulations. Saudi Arabia’s bourse, the biggest market in the Gulf, already allows trades in rights, according to Reuters.
The Peninsula
