ADX cuts trading fees as part of plan to double market cap

The exchange is also incentivising brokers by offering commission-free trading to companies that bring it more than Dh20m in fees

An investor monitors a screen displaying stock information at the Abu Dhabi Securities Exchange June 25, 2014. The spectacular rise and fall of Arabtec, Dubai's most heavily traded stock, teaches hard lessons about how risky the region remains for investors even as its rapid economic growth lures billions of dollars in fresh funds from abroad. Wild trading by local retail investors who dominate activity, plus weak corporate disclosure and a hands-off approach by regulators, can make a toxic mix, and on occasion destabilise entire markets.  REUTERS/Stringer  (UNITED ARAB EMIRATES - Tags: BUSINESS) - GM1EA6P1SB001
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Abu Dhabi Securities Exchange (ADX) is reducing transaction fees on all trading activities from next week as part of its plan to double the market capitalisation of companies listed on the exchange within the next three years.

Under the initiative, fees of all transactions that occur on ADX will be reduced to 0.175 per cent, from 0.225 per cent, the Abu Dhabi Securities Exchange said in a statement on Saturday.

“Reducing overall transaction costs for trading on the exchange is one of many initiatives we are undertaking to achieve our strategy of attracting new liquidity sources and making listing and investing in ADX an attractive value proposition,” Mohamed Al Shorafa, chairman of Abu Dhabi Securities Exchange, said.

“Abu Dhabi continues to diversify its economy on a path of sustainable long-term growth, and we are fully aligned with this vision. We will continue to deepen our markets through a wide range of products and services that meet the evolving needs of our stakeholders."

The market capitalisation of stocks listed on the ADX rose 39.7 per cent year-on-year to Dh750 billion in 2020 and reached more than Dh812bn by the end of last week. The value of securities traded last year jumped 28 per cent to Dh72.8bn, according to ADX.

The number of foreign investors on ADX also increased by 38 per cent in 2020 and the value of shares traded by them rose 6.5 per ent to Dh62.6bn.

"Our 2020 initiatives, including the introduction of market makers and covered short selling, have increased the number of institutional investors on ADX over the past year," Saeed Al Dhaheri, chief executive of Abu Dhabi Securities Exchange, said.

The rise in foreign ownership limits of several listed companies alongside new listings "aided the increase of our market capitalisation and fuelled our ambition to have it doubled by 2024", he said.

As part of the new fee structure, ADX also created an incentive plan, applied on an annual basis, for brokerage firms that generate Dh20 million worth of trading commission. Firms that fulfill the annual incentive requirement will be exempt from paying any trading commission to ADX for the year in which the threshold is met.

The exchange, which is owned by state holding company ADQ, expects three new exchange-traded funds to list this year, following the market debut of Chimera Capital's S&P UCITS ETF in August last year. It also expects more listings on its junior Second Market, after four businesses – Sawaeed Holding, Zee Stores, Easy Lease and Palm Sports – joined in 2020.