The Dubai Financial Market (DFM), has reached the final stages to launch the ‘DFM Derivatives Platform’, by partnering with Dubai Clear, Nasdaq Dubai and popular brokerage firms, to allow investors to diversify and access leverage.
DFM expects to roll out the platform by October 2020, introducing the future contracts of equity on single stocks with 1, 2 and 3 months of tenure period. The first contracts will have Emaar Properties, Dubai Islamic Bank, Emirates NBD, Emaar Development and Emaar Malls which are the most liquid equities listed on DFM.
The Chairman of DFM, Essa Kazim, says that this new platform is in line with the market’s aim to diversify its product offering. The platform will have a significant role in widening the market and helps Dubai to maintain its leading position as a capital markets hub.
“DFM’s diverse investor base represents 207 nationalities and the derivatives platform will enable them to diversify their portfolios, manage risk and gain from the leverage. We have developed a robust regulatory framework in line with international best practices.”
The Nasdaq Dubai’s derivatives markets have received great results since its launch in September 2016 and has developed throughout these years with the UAE’s and Saudi Arabia’s single stock and index-based contracts. This growth is an example of strength from investors, says CEO of Nasdaq Dubai, Hamed Ali.
DFM equity futures will be seamlessly cleared on the CCP (central counterparty clearing house) of DFM’s subsidiary, Dubai Clear, using Nasdaq Dubai Operational and IT infrastructure.
Maryam Fekri, CEO of Dubai Central Clearing & Depository Holding, said, “The introduction of a CCP ensures efficient use of collateral by Clearing Members to optimize market liquidity efficiently and safely in accordance with international best practices.”
A futures contract is an agreement between two partied to buy or sell at a specific price on a future date. The payment and delivery of the asset are made on a future date noting as the delivery date. The assets in a futures contract can be commodities, stocks, currencies, interest rates and bonds.