ADX launches derivatives market; Index futures to be issued in 2022

By Arya M Nair, Official Reporter
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The Abu Dhabi Securities Exchange (ADX) has launched a derivatives market as part of its ongoing efforts to strengthen 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.

Etisalat, First Abu Dhabi Bank (FAB), International Holding Company (IHC), ADNOC Distribution, and Aldar Properties have started single share futures trading, with more securities to be added later this year and in 2022.

Index futures will be issued 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 have joined the ADX Derivatives market, including Abu Dhabi Developmental Holding Company’s (ADQ) Q Market Makers, BHM Capital, and Al Ramz Capital, to provide liquidity on the new platform, allowing for a more efficient and orderly market. The dispensation of short-term margin trading licenses to more brokerages will allow for increased participation.

Mohamed Ali Al Shorafa Al Hammadi
Mohamed Ali Al Shorafa Al Hammadi

“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.”

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.

The ‘ADX One’ strategy, which was launched at the start of 2021, aims to bring a wider range of products and services to market, as well as advanced infrastructure, in collaboration with global market leaders. 

The Abu Dhabi Securities Market General Index’s market capitalization has nearly doubled since the beginning of the year, reaching $403 billion, supported by a series of listings and increased international investment.

Related: Abu Dhabi-based Fertiglobe’s shares surge 20% at ADX debut trading