Middle East equity derivatives market set to expand - NASDAQ Dubai Survey

Middle East equity derivatives market set to expand – NASDAQ Dubai Survey

79 per cent of brokers and fund managers say equity derivatives use will grow in 2010.

April 5, 2010 11:32 by Ben Flanagan

Dubai: 05 April, 2010: The Middle East equity derivatives market is likely to expand in 2010 compared to last year’s levels, according to 79 per cent of fund managers and brokers polled by NASDAQ Dubai.

A total of 87 per cent described equity derivatives as useful tools for managing risk, while 72 per cent said their organisation was interested in learning more about the uses and benefits of equity derivatives.

The survey received responses from representatives of 40 fund managers and brokerage firms who attended the FOW Derivatives World Middle East conference in Dubai on March 16.

Jeff Singer, Chief Executive of NASDAQ Dubai, said: “The survey shows that investors are poised to make increasing use of the Middle East equity derivatives market, which is still in its infancy and has potential for rapid growth.

“NASDAQ Dubai will continue to drive the development of the market forward, by expanding its product range and by educating finance professionals and the public about the advantages that equity derivatives offer.”

NASDAQ Dubai launched the UAE’s only equity derivatives platform in November 2008. Trading volumes have expanded from 90 in January 2009 to several thousand every week by the end of the year.

The market currently consists of futures over 21 individual UAE stocks and over the FTSE NASDAQ Dubai UAE 20 index, which is well correlated with equity markets across the MENA region and offers significant hedging and investment possibilities.

Useful additions to NASDAQ Dubai’s equity derivatives market would include futures listed on other GCC individual stocks and equity indices, as well as equity options, respondents to the survey said.

A total of 93% of respondents said that NASDAQ Dubai’s trading model provides useful protection against the risk of default by a counterparty, which can affect over-the-counter trades. NASDAQ Dubai operates a central clearing house which eliminates such risk.

NASDAQ Dubai Academy, the exchange’s training arm, will run two one-day training courses that explain the benefits of equity derivatives and how to trade them. The first course, on April 13, is suitable for the general public and the second, on April 14, is aimed at finance professionals. More information is available at www.nasdaqdubai.com/academy

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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, exchange-traded commodities, structured products, Sukuk (Islamic bonds) and conventional bonds.

The majority shareholder of NASDAQ Dubai is Borse Dubai with a two-thirds stake. NASDAQ OMX Group 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).

Dubai Financial Market (DFM) has agreed to acquire all the shares of NASDAQ Dubai, subject to regulatory approval.

For more information, visit www.nasdaqdubai.com.