ADX signs tech agreement with Nasdaq to launch derivatives market this year

The Abu Dhabi exchange plans to launch single stock futures and index futures in the fourth quarter of 2021 before expanding to a wider range of derivative products

The Abu Dhabi Securities Exchange plans to launch a derivatives market this year. Mona Al-Marzooqi / The National

Abu Dhabi Securities Exchange (ADX) has signed an agreement with the Nasdaq for technology solutions, a key step that will enable the bourse to launch a derivatives market this year as it continues to improve its product offering.

Under the agreement, the Nasdaq will deliver marketplace solutions to ADX, including matching, real-time clearing and settlement technology, according to an ADX statement on Wednesday.

The exchange plans to launch single stock futures and index futures in the fourth quarter of this year before expanding to a wider range of derivative products. The initiative will further diversify investment avenues and provide investors with hedging tools for effective risk management, it said.

It will also launch central counterparty clearing to promote clearing efficiency, stability and boost investors’ confidence.

“ADX is on a journey to significantly enhance liquidity and expand market capitalisation through our ‘ADX One’ strategy, which provides a clear road map for further development of a vibrant exchange,” said Mohammed Al Shorafa, chairman of ADX.

“By deepening our capital markets and increasing the range of innovative products and services, we are supporting the UAE’s strategy for economic diversification, providing growth companies with favourable access to global capital and allowing investors to participate in the UAE’s ambitions.”

The ADX is expanding investable asset classes and developing new offerings for regional and international investors, as the region’s second-biggest bourse continues to outperform its peers in the GCC.

The ADX General Index crossed 7,700 points for the first time this year, boosted by a series of new listings and rising investments by international investors. The benchmark index has gained 52 per cent year to date.

On Tuesday, the ADX said it has waived minimum commission fee on the trade of all listed securities to boost trading by smaller investors.

The move is expected to add to liquidity and increase volumes of small trades, which are typically undertaken by individual investors, ADX said at the time.

Earlier this week, the Abu Dhabi bourse said it would slash commissions by 50 per cent and add another hour to trading time as it seeks to boost liquidity in the market.