Abu Dhabi Securities Exchange launches derivatives market

The Abu Dhabi Securities Exchange has introduced a derivatives market as part of its initiatives to develop the emirate’s capital markets.

Trading of Etisalat, First Abu Dhabi Bank (FAB), International Holding Company (IHC), ADNOC Distribution and Aldar Properties in single equity futures commenced today, November 4, with more securities to be added later this year and in 2022.

Index futures will be introduced in the first quarter of next year. The derivatives market is using marketplace technology delivered by Nasdaq, a statement said.

.@ADX_AE has launched a derivatives market, a key initiative of its ADX One strategy to deepen market liquidity and the exchange’s products and services offering. pic.twitter.com/AwHVNUudtJ

— مكتب أبوظبي الإعلامي (@admediaoffice) November 4, 2021

Three market makers including ADQ’s Q Market Makers, BHM Capital, and Al Ramz Capital join the ADX Derivatives market to provide liquidity on the new platform. Meanwhile, the dispensation of short-term margin trading licenses to more brokerages will allow for increased participation.

The launch of the derivatives market has also been accompanied by the introduction of central counterparty clearing (CCP), the statement added.

The derivatives market allows initial trading in single stock futures of Etisalat, FAB, IHC, ADNOC Distribution, and Aldar Properties, with more to be added, and will commence trading on index futures from Q1 2022.

— مكتب أبوظبي الإعلامي (@admediaoffice) November 4, 2021

Mohammed Ali Al Shorafa Al Hammadi, chairman of ADX, commented: “The launch of derivatives trading on the ADX is a significant milestone for our young but fast-growing exchange. The introduction of stock and index futures will support our ‘ADX One’ strategy which aims to provide diversification avenues and enhance liquidity to create a dynamic capital market.”

Saeed Hamad Al Dhaheri, chief executive officer of ADX, added: “The introduction of derivatives marks an important new chapter in the history of the ADX, providing tools to investors to trade on their views on the direction of individual securities and indices and execute sophisticated trading strategies in an effective manner. Supported by ADQ’s Q Market Makers and other market makers, the instruments will be highly liquid allowing for active participation. The continued development of ADX will encourage companies to raise capital to fund their needs while diversifying their investor base.”

The ‘ADX One’ strategy, launched at the start of 2021, aims to bring a broader offering of products and services to market. The market capitalisation of the Abu Dhabi Securities Market General Index recently nearly doubled since the beginning of the year, rising to Dhs 1.48 trillion.