A potential merger between the United Arab Emirates' two main bourses is unlikely before 2011 but would be good for traded UAE companies, the chief financial officer of the region's largest listed builder said on Monday.

"I don't think you will see any progress before next year because the process takes time," Ziad Makhzoumi, CFO at Arabtec said at the Reuters Middle East Investment Summit in Dubai.   

The UAE has three bourses -- the Abu Dhabi Securities Exchange (ADX), Dubai Financial Market (DFM), and Nasdaq Dubai -- each fighting to draw liquidity.

DFM and Nasdaq Dubai are merging some operations. Arabtec is one of the most actively traded stocks on the Dubai Financial Market.

"You need approvals, you need government approvals, you have two legal entities, and you have the federal government involved. So there's a process," Makhzoumi said.

Talks of a potential merger between the Dubai Financial Market and the Abu Dhabi Securities Exchange have been ongoing this year as the two exchanges seek to create a single market amid slumping volumes and low trading revenues.   

Makhzoumi said a merger between the two bourses would be a positive for the region as it would help boost trading volumes and result in "substantial" cost savings to both the exchanges.

Slumping market turnover has forced some equity brokerages in the UAE to cut staff or suspend operations as firms struggle to cope with costs and low revenue. Several brokers have asked for their licences to be suspended this year or have ceased trading operations.

The two bourses have also reached an agreement on valuation, which was a key impediment to the merger, Makhzoumi said.

"When you merge two companies that have goodwill, revenue and customers, how you value them is the question," he said. "I think the way you value X, you should value Y with the same principle and they had some issues with valuations."    

On Sunday, a local newspaper said Goldman Sachs has almost completed a study on a possible merger of the United Arab Emirates' two main bourses and would present its report to Emirates Investment Co. which is supervising the proposed merger.  - Reuters