Mideast equity derivatives market set to expand

Nasdaq Dubai will continue to drive the development of the market forward Jeff Singer, CEO of Nasdaq Dubai. (EB FILE)

The Middle East equity derivatives market is likely to expand this year 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 year end.

The market currently consists of futures of more than 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 per cent 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, which will help 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.


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