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Abu Dhabi and Dubai completed due diligence on a potential merger of the two stock markets in the United Arab Emirates, bringing the combination a step closer, according to two people familiar with the matter. Valuation and structuring work was completed in December, with the deal now requiring approval from the governments of the two emirates, the source said, asking not to be identified as the information isn’t public. The merger would come after the exchanges failed to attract local listings in 2013 and would create the largest bourse in the Middle East after Saudi Arabia. The combined market value of companies listed on the DFM and the ADX, as the two bourses are known, would be about $200 billion, or the same size as Turkey and compares with about $480 billion in Saudi Arabia. “It will provide a deeper pool of liquidity and access to the UAE markets will be enhanced,” Jaap Meijer, Dubai-based director of equity research at Arqaam Capital Ltd., said by phone Monday. There will be “substantial cost synergies for the combined entity,” he said. The exchanges are still considering how to proceed after missing a previous deadline to complete the deal before the end of 2013, one of the people said. There isn’t a clear timetable as to when the merger will take place, the two people said. Shares of Dubai Financial Market, the only listed stock exchange in the Middle East, jumped 3.2 percent. The benchmark DFM General Index erased losses to close 0.5 percent higher, while Abu Dhabi’s measure fell0.3 percent. The measures were among the top performers of more than 90 indexes tracked by Bloomberg globally last year. Dubai’s gauge more than doubled, while Abu Dhabi’s jumped 63 percent as MSCI Inc. in June upgraded the UAE, the second-biggest Arab economy, and Qatar to emerging-market status. The upgrades have the potential to draw $1 billion of new funds into the UAE and the Qatari markets, investment bank EFG-Hermes Holding SAE said in a Jan. 16 note. The possible merger is “another important step in taking the UAE markets from frontier markets and confirming their status as an emerging markets player,” Mohammad Ali Yasin, managing director of NBAD Securities LLC, said by phone. The exchanges’ integration would follow a $15 billion joint venture between Dubai Aluminium and Abu Dhabi’s Emirates Aluminium Co. Abu Dhabi and the UAE’s central bank lent Dubai $20 billion in 2009 to stave off a default by the country’s commercial and trading hub. The Dubai stock exchange is home to Emaar Properties PJSC, the builder of the world’s tallest skyscraper, and the UAE’s largest lender Emirates NBD PJSC, while shares of Emirates Telecommunications Corp., the most valuable company in the UAE, trade in Abu Dhabi. JPMorgan Chase & Co. and First Gulf Bank PJSC are advising Abu Dhabi, according to the sources. Citigroup Inc. is advising Investment Corp. of Dubai, the investment company which controls the Dubai Financial Market, they added. KPMG examined Dubai Financial Market’s books, while Ernst & Young completed a similar exercise on the Abu Dhabi Securities Exchange, one of the people said. Spokesmen for Citigroup, Ernst & Young, Dubai Financial Market, JPMorgan and KPMG declined to comment, while no one at First Gulf Bank was available. A spokesman for Abu Dhabi’s stock market didn’t respond to calls and an email requesting comment. Dubai Media Office didn’t respond to emailed questions.