NASDAQ’s Equity Futures Market to open this September 2016

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Good news to Dubai investors! NASDAQ Dubai, the region’s international financial/stock exchange in UAE, whole GCC, Middle East, North Africa and Turkey, will be opening an equity futures market for trading single stock futures on the shares of UAE’s top companies starting next month, September 2016.

Futures are the agreement to purchase or trade shares at an agreed price value on a future date. Beginning September 1, Nasdaq Dubai will start trading futures in UAE’’s top 10 shares which comprises 55% of the traded value of UAE’s total listed equities.

This new market offers a great opportunity and several advantages to foreign, regional and local investors, said The Head of NBAD securities, Mohamed Ali Yasin who was interviewed on Business Breakfast show last August 9, 2016. He also explained how this new market can benefit investors.

In his interview, Mr. Ali Yasin explained that NASDAQ improved the set up of options market with the 10 most traded stocks  There are also interesting additions which has recently opened up to foreign investors and Etisalat is one of the leading and most interesting one.

These 10 stocks include Etisalat, DAMAC Propertis, Emaar Properties, Aldar Properties, DP World, Arabtec, Dubai Islamic Bank, First Gulf Bank (FGB), Dubai Parks and Resorts, and Union Properties.

The market maker this time is the leading financial service firm in UAE which is SHUAA capital instead of a foreign market maker way back in 2008-2010.

Maturities of futures contracts will be one to three months and be paid in cash. Every contract will give exposure to 100 other fundamental shares, with Shuaa Capital as the market-making services.

Ali said, they want to take small steps to see if there is a real appetite growth, and bid and ask for SHUAA capital to make a market.

The goal of Nasdaq Dubai is to soon establish futures based on UAE stock indexes and also single-stock futures on the shares of other nearby countries. But before this,

Moreover, Ali Yasin said in general, this is a good development because markets only live on long-only transactions such as our exchanges so options offer an immense breakthrough for investors to undertake an exposure without having to pay the whole value of stock shares. Investors can also buy these options to hedge certain positions they have in their portfolios.

An option is a financial instrument that can be utilized on nearly every investment goal under almost every market condition. It is a contract that gives the buyer the right, without the obligation, to purchase or sell an underlying asset at a certain value on or before the expiry date. Options are basically used to secure your investment from any decrease in prices.

When asked what investors were doing presently to hedge the local markets, He said the internationals have already established their own product line which they would sell to institutions. One of the developments of NASDAQ Dubai is trying to make this product useful and obtainable for individual investors as well as those experienced and high-net-worth investors who are capable of trading these options. Unlike before, now this have been made available even if you don’t belong to an international financial institution

According to him, the transparency set up will be very significant and the chance for more skilled investors who are knowledgeable about hedging and using options could benefit this without being a part of financial institutions over the counter. He hopes that the pricing will be more attractive because of the transparency of the market. 

Ali also explained that the most liquid stocks of the top 10 companies will be chosen and be made available for non UAE investors to invest. These will be the two major criteria that could lead to a contract for these options to sell. If successful, it would mean more activity in the exchanges and more companies will be coming to NASDAQ Dubai, asking to be included