Nasdaq Dubai Launches Futures On ADX Share Index

Dubai – Masaader News

Rashed Al Blooshi, Chief Executive of Abu Dhabi Securities Exchange (ADX), and Hamed Ali, Chief Executive of Nasdaq Dubai, rang the ADX market opening bell to welcome the launch today by Nasdaq Dubai of futures trading on ADX’s main share index, the ADI.

Futures trading on the ADI will raise the global profile of Abu Dhabi’s capital markets and encourage more foreign investment. The ADI has risen 70% in the last five years, tracking the performance of all its companies in sectors including telecommunication, financial services, real estate and energy. The index provides a benchmark of the overall performance of the ADX market which is the second largest in the GCC by market capitalisation and includes First Abu Dhabi Bank, Eshraq Properties and Etisalat among its listed companies.

The creation of index products is the latest expansion of Nasdaq Dubai’s futures market, which opened in September 2016 with single stock futures on leading UAE-listed companies.

Rashed Al Blooshi, Chief Executive of ADX, said: “By collaborating with Nasdaq Dubai in the launch of ADI futures we are encouraging not only investment into the futures themselves, but also into the equities market, as the flexibility provided by futures makes owning shares more appealing to many investors including large international funds.  Futures on the ADI provide important support for the ADX’s strategic plan 2016-2020 which includes diversifying the investor base and increasing market capitalisation.”

ADI futures are useful tools for hedging ADX shareholdings as well as for investment. They enable investors to make gains when the index is falling as well as rising, and make use of leverage to magnify gains.  Nasdaq Dubai offers two quarterly contracts in ADI futures, with  SHUAA Capital acting as market maker to support liquidity.

Hamed Ali, Chief Executive of Nasdaq Dubai, said: “This collaboration between Nasdaq Dubai and ADX is the outcome of the significant synergies that have long existed between us, and we are exploring further product launches and other areas of cooperation.  The trading of ADI futures on our market is an important initial step that supports the expansion and development of both Nasdaq Dubai and ADX to the benefit of regional and international investors. As one of the region’s largest stock markets with many leading Middle East companies among its listings, the ADX is an important partner for us.”

In October 2017 Nasdaq Dubai and ADX signed a Memorandum of Understanding to focus on broad collaboration and educational workshops.

More than 2.5 million contracts have been traded on Nasdaq Dubai’s futures market in single stock contracts, with a total value of more than 500 AED million. The market operates with eight leading UAE brokerages as Members and two active market makers. All ADX and Nasdaq Dubai brokerages can apply to be Members of the futures market. Nasdaq Dubai is in discussions with other regional and international financial institutions who wish to take part in trading or clearing on the market.

Nasdaq Dubai also launched futures today on Dubai Financial Market’s DFMGI index. Further expansion of Nasdaq Dubai’s futures market will include the creation of futures on regional MSCI equity indices under a licence agreement announced in October last year, as well as further more stock futures and option products.

About Nasdaq Dubai

Nasdaq Dubai is the international financial exchange serving the region between Western Europe and East Asia. It welcomes regional as well as global issuers that seek regional and international investment. The exchange currently lists shares, derivatives, Sukuk (Islamic bonds), conventional bonds and Real Estate Investment Trusts (REITS).

The majority shareholder of Nasdaq Dubai is Dubai Financial Market with a two-thirds stake.  Borse Dubai owns one third of the shares. The regulator of Nasdaq Dubai is the Dubai Financial Services Authority (DFSA). Nasdaq Dubai is located in the Dubai International Financial Centre (DIFC).

About Abu Dhabi Stock Exchange (ADX)

Abu Dhabi Securities Exchange (ADX) was established on November 15 of the year 2000 by Local Law No. (3) Of 2000, the provisions of which vest the market with a legal entity of autonomous status, independent finance and management.  The Law also provides ADX with the necessary supervisory and executive powers to exercise its functions.

These functions are:

– Provide opportunities to invest savings and funds in securities in order to benefit national economy.

– Ensure the soundness and accuracy of transactions and to ensure the interaction between demand and supply in order to determine prices.

– Protect investors through establishing fair and proper dealing principles between various investors.

– Impose stringent controls over securities transactions to ensure sound and conduct procedure.

– Develop investment awareness by conduction studies and issuing recommendations in order to ensure that savings are invested in productive sectors.

– Ensure financial and economic stability and develop trading methods in order to ensure liquidity and stability of prices of Securities listed on the market.

ADX is a market for trading securities; including shares issued by public joint stock companies, bonds issued by governments or corporations, exchange traded funds, and any other financial instruments approved by the UAE Securities and Commodities Authority (SCA).

At the end of 2016, ADX had 71 listed securities with a market capitalization of AED 475 billion (USD 129 billion).  Those securities include 66 public joint stock companies, 2 private joint stock companies, 1 Exchange Traded Fund (ETF), 1 Abu Dhabi Government bond, and 1 convertible bond.   ADX listed companies are allocated in nine sectors; Banking, Real Estate, Consumer Staples, Investment and Financial Services, Industrial, Telecommunication, Services, Energy, and the Insurance sector.

ADX allows for investors to trade through any of the registered brokerages at the exchange through advanced electronic automated services. ADX has also signed a number of agreements with major financial institutions to provide for custody services, including renowned international corporations; namely the National Bank of Abu Dhabi (NBAD), HSBC, Standard Chartered, Deutsche Bank and Citi Banking Group.

ADX goals are in line with Abu Dhabi Government Economic Vision 2030.  The 2030 economic plan plays a vital role in ADX strategy since it places the financial market in the context of economic and social development.  The development would be through diverting savings towards investment in the various economic sectors and developing the financial infrastructure of Abu Dhabi to transform the emirate into one of the leading finance and services center in the region.

In 2014, ADX was upgraded to ‘Emerging Market’ status by both MSCI index (Morgan Stanley Capital International) and S&P Dow Jones, thus greatly increasing the likelihood of inward global investment flows. ADX was already classified as an Emerging Market by FTSE in 2009 and in 2011 by S&P and Russell Investments.

In 2015, ADX won the Most Innovative Exchange GCC 2015 Award.  The award, given by Capital Finance International, celebrates achievement, innovation from an international perspective, recognizing organizations with innovative technology products backed by strong management, excellent service standards and sound business models. Capital Finance International is a leading print journal and online resource reporting on business, economics, and finance.

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