The Abu Dhabi Securities Exchange (ADX) is coordinating with brokerages to introduce short-selling on the exchange by the end of March, according to Rashed Al Baloushi, the chief executive.
Mr Al Baloushi told Bloomberg the exchange was working on final touches to the regulations, and expected the practice to be permitted from next month onwards.
The ADX initially announced plans in December for technical short-selling, to boost market liquidity and attract more foreign investors.
The Dubai Financial Market last month announced plans to introduce the practice for selected securities "in the coming months".
Short-selling has been practised by institutions throughout the region, despite being illegal outside Kuwait, and has been blamed for sharp falls in local stock markets.
The Securities and Commodities Authority introduced regulations enabling short-selling in 2012 for licensed market makers, with other institutions requiring permission from the regulator and the relevant exchange.
A market maker is a broker and dealer that balances supply and demand for shares by matching buyers and sellers.
It also stands ready to buy or sell shares when there are no public buy or sell orders, thus creating a market.
The Abu Dhabi bourse licensed Al Ramz Securities as a market maker in September. The DFM has yet to licence any such institutions.
Muscat bourse recovers on buying support
Shares on the Muscat bourse recovered amid better investor sentiment on Wednesday. The MSM30 Index advanced by 0.80 per cent to close at 5,510.18 points. The MSM Sharia Index closed at 801.51 points