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Dubai stockbrokers to be targeted by 'mystery shopper' programme

DFM signs agreement with Dubai Economy to perform quarterly checks on service provision.

Stockbrokers in Dubai have welcomed a move announced by the Dubai Financial Market (DFM) to introduce a rating system which will rank them on their service levels. The DFM said on Tuesday that the new DFM Brokers Rating will "measure the strengths and weaknesses" of different communications platforms used by brokers, including websites, call centres and customer service centres.

The DFM said it has signed an agreement with Dubai Economy to help implement the initiative.

Dubai Economy will undertake a 'mystery shopper programme' targeting licensed brokers, the results of which will make up about 70 percent of a brokerage company's ranking. The remaining 30 percent is based on four criteria: service efficiency, service innovation, multi-channel access and commitment to corporate governance, a DFM statement announcing the system said.

Malik Kanawati, a senior director at Al Ramz Capital, said that it had been informed of the move ahead of the DFM's announcement. “There's always a few meetings that take place where the ideas are bounced off the brokers and feedback is collected," he added.

When asked if he felt the new rating system was necessary, he said: "It is, given the fact that you have 50 brokers in this market, ranging from brokers that have more or less the minimum capital required to stay in business, to companies like Al Ramz with a capital of 500 million (dirhams) and a full range of investment products.

"It makes sense for somebody to come in and help consumers to gauge where they can be serviced best," he told Zawya in a telephone interview.

A spokesman for the Dubai Financial Market said that trading brokerages need to hold 3 million dirhams worth of paid-up capital and provide one million dirhams worth of collateral, either in the form of bank guarantees or cash. Brokerage firms involved in trading and clearing need 10 million dirhams of bank capital, and provide 50 million dirhams of collateral.

Tariq Bin Hendi, executive vice president and head of products & advisory at Emirates NBD Group, said that it also welcomed the initiative, which he said would "boost transparency and ensure that best practices and services are being offered to clients".

DFM Group, which announced an 8 percent decline in annual profit to 232.9 million UAE dirhams ($63.4 million), as revenue declined by 4 percent to 421.6 million, said that Dubai Economy would provide it with reports on brokers on a quarterly basis.