DIFX set to list equity derivatives

Dubai: The Dubai International Financial Exchange (DIFX) said on Wedensday it will list equity derivatives next month in a bid to boost liquidity and attract more investors.

Future contracts will be launched first, followed by options at a later stage, the exchange said.

These derivatives will be based on the FTSE DIFX UAE 20 Index, which comprises shares of 12 companies listed on the Dubai Financial Market (DFM), seven stocks from the Abu Dhabi Securities Exchange (ADX) and shares of DIFX-listed DP World.

They are "primarily being created to enhance liquidity," chief executive officer, Jeffrey Singer, told reporters.

The move is part of a number of steps the exchange is taking to grow trading volume to achieve its aim if becoming a major player in the bourse business. Launched in 2005, it has only attracted a limited number of listings and has struggled to build liquidity.

The DIFX has also decided to allow listings of securities denominated in the UAE dirham.

Companies with dollar-denominated securities can also decide to convert their stock into dirham equities.

It will also increase trading hours in November by opening from 10am to 5pm from Sunday to Friday. At present the trading hours are from 11.45am to 5pm and the working week is from Monday to Friday.

The exchange is regulated by the Dubai Financial Services Authority (DFSA) unlike the local stock exchanges DFM and ADX that are under the Emirates Securities and Commodities Authorities (Esca).

The DIFX is owned two-thirds by Borse Dubai and one-third by US stock exchange Nasdaq as a result of their marriage following the complex takeover deal for OMX, the Nordic and Baltic bourse operator.

Gaining exposure

Singer said the DIFX is creating a "fast-track" process for US companies to have a secondary listing in Dubai. He said this will allow UAE retail investors to get exposure to American stocks.

Since mid-September liquidity on the DIFX has improved as the exchange now requires all over-the-counter (OTC) trades to be reported to it. About half of the volume traded on the DIFX is OTC, Singer said.

The move is part of a number of steps the exchange is taking to grow trading volume to achieve its aim if becoming a major player in the bourse business.