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ADX plans derivatives market launch in Q4

Abu Dhabi - Nasdaq and ADX sign new market technology agreement; Single stock and index futures will provide investors with hedging tools

The Abu Dhabi Securities Exchange (ADX) plans to launch single stock and index futures on its new derivatives market in the fourth quarter of this year, the Abu Dhabi government media office said on Wednesday.

The exchange plans to use Nasdaq technology, including matching engine and real-time clearing and settlement services, it said on Twitter.

“The exchange plans to launch single stock futures and index futures in the fourth quarter of this year before expanding to a wider range of derivative products. The initiative will further diversify investment avenues and provide investors with hedging tools for effective risk management,” according to the ADX statement on Wednesday.

The derivatives market will be accompanied by introducing central counterparty clearing (CCP) to promote clearing efficiency, stability and confidence in the market, the statement said.

Expanding market capitalisation

Mohammed Ali Al Shorafa Al Hammadi, chairman of ADX, said the exchange is on a journey to significantly enhance liquidity and expand market capitalisation through ‘ADX One’ strategy, which provides a clear road map for further development of a vibrant exchange.

“By deepening our capital markets and increasing the range of innovative products and services, we are supporting the UAE’s strategy for economic diversification, providing growth companies with favorable access to global capital and allowing investors to participate in the UAE’s ambitions,” Al Hammadi said.

ADX, Nasdaq sign deal

The ADX has taken a key step towards launching a derivatives market this year by signing an agreement with Nasdaq to deliver marketplace technology solutions, including matching, real-time clearing and settlement technology. It is rapidly expanding asset classes and developing new offerings for both regional and international investors.

The ADX General Index (ADI) has recently reached 7700 points for the first time, supported by a series of listings and increased participation by international investors. In addition, the index has gained 52% year to date, making it one of the best performing equity indexes in the world.

“We are confident that the launch of a derivatives market will be another important milestone, empowering investors on the exchange who wish to implement sophisticated trading strategies. Our strategy is to ensure that investors and issuers derive significant benefits of a sophisticated marketplace by investing further in technology, broadening our offering, and attracting a wider range of institutional investors,” said Saeed Hamad Al Dhaheri, chief executive officer of ADX.

ADX market leader

Lars Ottersgard, executive vice-president and head of Nasdaq Market Technology, said ADX continues to be an industry leader in innovating and evolving the Middle East’s capital market ecosystem.

“By leveraging Nasdaq’s robust and flexible technology solutions, ADX can further evolve its endeavors to expand into a leading derivatives marketplace and one of the largest multi-asset marketplaces in the Middle East. We look forward to progressing our technology partnership and supporting ADX in their growth journey,” Ottersgard said.

Nasdaq’s end-to-end market technology powers more than 2,300 companies in 50 countries, spanning the world’s financial industry, including capital markets infrastructure operators, market participants, banks, and regulators.

— muzaffarrizvi@khaleejtimes.com