By: Mahmoud Gamal
Dubai – Mubasher: The new UAE’s futures markets on Nasdaq Dubai’s platform will allow investors to hedge markets’ declines and help increasing foreign money flows.
On Tuesday, Abu Dhabi Securities Exchange (ADX) and Nasdaq Dubai signed an agreement to develop and launch an Index Futures contract based on the Abu Dhabi General Index, on Nasdaq Dubai’s derivatives platform.
Futures contracts would be settled in cash, as each contract will be matched with 100 basic shares.
The futures market in Nasdaq Dubai will provide hedging (protective) and investment tools for individuals and institutions.
This tool will attract investors and international money flux to Nasdaq Dubai, sales analyst at Mubasher Karim Al Shammas said.
Nasdaq Dubai had announced last week a licencing agreement with MSCI Company that would allow the markets to use the MSCI regional indexes to trade derivatives on Nasdaq Dubai.
This step would allow investors in the two markets to hedge their positions and assume new ones, Al Shammas added.
The futures’ volumes on Nasdaq are already low, which would cause positive activities in shares once fluctuations increased, Al Shammas noted.
This will help diversifying market products, which in turn encourages market participants to increase their activity in the capital markets, Al Shammas said.
Revitalization of futures market
Trading Exchange-Traded Funds (ETF) in the UAE markets would primarily foster futures market, Manaf Al Malouhi, financial analyst, said.
This step would help investors by offering the chance to trade the indices directly on the futures market, which was not available before, providing additional financial tools to funds and portfolios, allowing them to hedge market fluctuations, as well as providing space to perform speculations within the index, Al Malouhi added.
Translated by: Mohammad Shokhba