ADX may be open to Shariah compliance

The Acting Chief Executive and Director of Operations, Rashed Al Baloushi, yesterday said that there is no current policy for the ADX to operate in compliance with Shariah, but this may happen in future.

Al Baloushi was speaking to Emirates Business on the sidelines of the signing of a memorandum of co-operation with Istanbul Stock Exchange (ISE).

He said no steps have been taken as yet to classify listed companies as Islamic and non-Islamic. But since the ADX has a strategy that focuses on the diversification of financial derivatives and services, the signing of the memo aims to benefit from the major expertise of Istanbul Exchange in the fields of exchange and Islamic derivative products, he said.

"We will benefit from them if we decide to classify listed companies as Islamic and non-Islamic, or when we launch Islamic products in Abu Dhabi market, which is probable in the future."

Asked whether the listing of Turkish companies in the ADX is expected, Al Baloushi said there is no plan at the moment for such listing, but "we found a strong Turkish desire for co-operation with exchanges of Arab and Gulf countries, and we are happy for that and (hope to) integrate with it".

There is no policy to set up a link between the financial markets of the UAE and Turkey, said Al Baloushi. The link between the ADX and the DFM is the best in the Middle East, he said, adding that the experiment succeeded because of a strong will.

Al Baloushi declined to comment on the merger between the two markets and the impact it would have on the country's financial markets. However, a Reuters report yesterday quoted a source saying a merger of the bourses is imminent. "The merger is being discussed at the highest level and the outcome is awaited imminently," an ADX official told the news agency, declining to be identified. "It would be good for both markets, instead of them competing against each other. This is a sign of consolidation in the UAE."

The ADX recently launched the country's first exchange-traded fund, and Al Baloushi said: "We have received several listing requests, but we will not disclose them at the moment until the process is complete."

He described as "very good" the demand for the National Bank of Abu Dhabi ETF, the first to be listed at the ADX last month. Preparations are under way for the launch of a second fund, a partnership between an international company and the NBAD. It will be a health service fund. Several other funds are expected soon, said Al Baloushi.

ADX yesterday hosted the third meeting of the 57 exchanges of the Organisation of Islamic Conference, which discussed the challenges facing Islamic banking and financial work.

Shariah scholar Hussein Hamed Hassan said markets in Arab and Islamic countries badly need Islamic financial and investment derivatives and tools. The past few years saw new products, mainly sukuks and ijara, he said.

The volume of Islamic sukuks currently stands at $1.7 trillion (Dh6.24trn) and sukuks issued in the UAE over the past three years totalled $33bn, the scholar pointed out.

Meanwhile, ISE Chairman and CEO Huseyin Erkan said the co-operation agreement signed with the ADX will strengthen relations between Abu Dhabi and Turkey. The memorandum comes within other agreements to be signed with other Arab exchanges, mainly Dubai, Egypt, Qatar and Oman.