The Nasdaq Dubai exchange just recently launched futures contracts covering the main indexes of the country’s two major stock markets in Dubai and Abu Dhabi, in a move that could attract fresh money to the UAE’s equity markets.
The futures allow exposure to the equivalent index at Dubai Financial Market and the General Index of the Abu Dhabi Securities Exchange, thus giving investors new opportunities.
The Chief executive of Nasdaq Dubai, Hamed Ahmed Ali, told reporters that this is one of the templates for stock markets in the United Arab Emirates and how they can supplement each other.
In late 2016, Nasdaq Dubai began trading single stock futures for shares in the main companies of the United Arab Emirates (UAE). The exchange said that over 2.5 million of those contracts worth over 500 million dirhams have changed hands.
In many of the single-stock futures, trading volumes have been uncertain. Ali however described investor feedback as encouraging while also disclosing that futures now exist for seventeen UAE listed companies.
Gulf countries have been slow in the introduction of equity derivatives, with the exception of Kuwait, fearing they could destabilize markets.
As low prices however drain liquidity from the region, a number of bourses plan derivatives to try to stimulate investment.
The securities exchange of Saudi Arabia, the largest in the region, says it plans to introduce stock futures and options in 2020.
Nasdaq Dubai has stated that talks were ongoing between it and regional and international financial institutions that wanted to take part in trading equity futures or clearing them.
The exchange went on to say that it planned to create futures covering regional MSCI equity indexes under licensing agreement announced last October, along with a more single stock futures and options at a later date.