The Abu Dhabi Securities Exchange has introduced a derivatives market as the exchange rolls out initiatives to develop Abu Dhabi’s capital markets and bring its products and services in line with global peers. With the launch of single equity futures, the new market will give investors and traders the opportunity to benefit from increased leverage, two-way market exposure, and hedging capabilities. 

Trading in the single equity futures of Etisalat, First Abu Dhabi Bank (FAB), International Holding Company (IHC), ADNOC Distribution and Aldar Properties commenced today, with more securities to be added later this year and in 2022.  Index futures will be introduced in the first quarter of 2022, ahead of the expansion into a wider range of derivative products. The derivatives market is using marketplace technology delivered by Nasdaq.

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, facilitating an efficient and orderly market. The dispensation of short-term margin trading licenses to more brokerages will allow for increased participation. The launch of the derivatives market has been accompanied by the introduction of central counterparty clearing (CCP) to promote clearing efficiency, stability, and confidence in the market.

H.E. 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. At the same time, the exchange’s efforts to provide innovative products and services will aid the Emirate’s sustainable economic growth trajectory, providing further opportunities for investors to share in the unique growth opportunities afforded by Abu Dhabi companies.”

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.  We will continue to attract investors worldwide by enhancing our technology and providing greater choice of products and services.”

Magdi Shannon, General Manager at QMM, said: “Liquidity plays an integral role to the successful development of Abu Dhabi’s capital markets. The launch of the ADX derivatives exchange is a key milestone in that journey, and we stand ready to ensure its success by providing liquidity, tightening spreads, and encouraging order book volume, giving investors and traders increased confidence in the exchange. Market making has always been a fundamental part of any market infrastructure, and its influence will continue as long as we trade financial assets.”

The ‘ADX One’ strategy, launched at the start of 2021, aims to bring a broader offering of products and services to market and along with state-of-the-art infrastructure in partnership with global market leaders. The market capitalization of the Abu Dhabi Securities Market General Index recently has nearly doubled since the beginning of the year, rising to AED 1.48 trillion, supported by a series of listings and increased international investment. Meanwhile, the benchmark Abu Dhabi General Index (ADI) has gained 56% during the first ten months of this year, making it one of the best performing equity indexes in the world within the same period.