ADX and Stanchart in custody deal

Abu Dhabi Securities Exchange (ADX) and Standard Chartered signed a custody agreement, which will both encourage and facilitate further international investment in Abu Dhabi and broaden the exchange's international investor base.

Although custody services are a relatively new product in the Gulf, this is the third such agreement ADX has signed. Speaking on the day of the signing, Tom Healy, Chief Executive of ADX, explained that this agreement would be of particular benefit to foreign investors.

"Currently, only 13 per cent of listed ADX stock is owned by foreign investors, of which nine per cent is owned by non-GCC nationals. Custody agreements such as these are an important step in developing Abu Dhabi's capital market, and we expect that number to increase. As more companies list and Abu Dhabi's dynamic economy continues to grow, more international investors will turn to our market."

Jeremy Parrish, Chief Executive Officer of Standard Chartered for Abu Dhabi and Al Ain, discussed the significance of this agreement for the bank, saying: "Standard Chartered is one of the very few international banks offering sub-custody services in the GCC and in response to the country's economic advancement, our regional and international clients are showing great interest in UAE securities. Now, offering this access to them puts us one step closer to offering a complete suite of products and services."

A custodian is an integral part of the chain of intermediaries that constitute the investment for foreign institutional investors.

While the execution of trade takes place through brokers, a custodian performs key functions such as opening cash and securities accounts, settlement of trades, collection of dividends and safeguarding clients' assets, apart from management reporting and reconciliations.

A custodian does not provide investment advice but helps in explaining the operational nuances to clients.

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