Dubai Financial Market begins equity futures trading

By Rahul Vaimal, Associate Editor
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Dubai Financial Market (DFM) has launched equity futures trading as part of its new Futures Trading Platform, amid unprecedented participation from the brokerage community.

The introduction inspires DFM’s strategy to diversify its product offers and draw further investments. In line with international best practices, the DFM has established a comprehensive regulatory structure, providing a favorable environment for active participation by different market participants. This strategic move helps investors to diversify and hedge their portfolios and access leverage for equity futures.

The DFM arranged a market opening bell-ringing ceremony to celebrate the launch of this robust equity futures platform. To date, 16 leading companies have been drawn to the platform as Launch Partners, including trading members, market makers along with technology and data providers.

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Essa Kazim

“The launch of this new platform is another milestone in DFM’s momentous journey. It underlines our commitment to diversify investment opportunities for DFM’s large and diversified base of local and international investors. Owing to this strategy, the DFM has become one of the leading regional markets that provide multiple asset classes including, shares, bonds, Sukuk, ETFs and equity future. Additionally, we plan to add REITs trading and expand our platforms and attract new companies for listing in the coming period”.

Currently, the platform provides single-stock futures contracts for five of DFM’s most liquid equities, including Emaar Properties, Dubai Islamic Bank (DIB), Emirates NBD (ENBD), Emaar Development and Emaar Malls, with tenures of 1, 2 and 3 months. The platform plans to expand the scope of its contracts in due course, including index-based futures.

Hassan Al Serkal, CEO of DFM said, “We look forward to seeing various market participants fully leverage the benefits of this promising platform, as we are confident of its growth prospects considering investors’ growing demand for diversified financial instruments and multiple asset classes”.

“This demand enabled us to launch the platform with unprecedented support and strong participation from brokerage firms that showed interest to take part from day one as trading members and market-making Launch Partners,” added Mr. Al Serkal.

Hamed Ali, CEO of Nasdaq Dubai and Deputy CEO of DFM said, “Dubai’s capital markets have successfully created all-inclusive infrastructure and regulations that support listing and trading of numerous asset classes. They also provide trading-support mechanisms such as market making, liquidity provision, etc. We have developed favorable trading rules for equity futures in line with best practices and coordination with members and regulators, to ensure that equity futures are well-positioned to resonate growth levels witnessed on international markets.”

The DFM equity futures will be cleared using Nasdaq Dubai Operational and IT infrastructure on the CCP of DFM’s subsidiary, Dubai Clear.

Maryam Fekri, CEO of DCCD said, “We welcome the launch of the platform, as one of the first clients to employ our world-class solutions since Dubai Clear’s official launch in April 2020. Dubai Clear is one of the region’s first fully operational independent central counterparty (CCP) company for equity clearing, noting that CCP ensures efficient use of collateral by Clearing Members to optimize market liquidity efficiently and safely following international best practices.”

Launch partners

The new platform has been welcomed by senior executives of leading brokerage firms, technology suppliers and data providers as a significant initiative to diversify investment prospects and attract more investment. As a result of the strong commitment of the brokerage group, ten brokerage firms have been approved by the DFM, and they are Arqaam Securities, Al Dar Shares and Bonds, Al Ramz Capital, BH Mubasher Financial Services, Global for Shares & Bonds, Mena Corp Financial Services, Shuaa Securities and SICO Financial Brokerage, as equity futures members, while both Al Ramz Capital and BH Mubasher Financial Services have been licensed as equity futures market makers.

Besides, SK Advisory FZ (Zag Trader), First Information Technology, Global Market Access Holding (DIFC) and Horizon Software, as technology and data providers, have joined forces with the DFM.

The DFM aims to further broaden the equity futures platform and draw more trading participants, as well as licensing market markers to further boost trading and appeal to the increasing demand of investors.