Abu Dhabi Securities Exchange (ADX), the second-largest bourse in the Arab world by market value, has adopted FTSE Russell’s industry classification benchmark (ICB) for all its listed equities as it seeks to attract more international investors.
The introduction of the ICB is part of the transition of ADX indices to the co-branded FTSE ADX index series under the partnership between FTSE Russell and the Abu Dhabi bourse, officials said.
The move is aimed at providing greater market transparency, enabling accurate research and supporting institutional investors' portfolio management and asset allocation strategies.
"The ICB will support new indices that we are creating with FTSE Russell, which will encourage the listing of index products and highlight the unique investment opportunities on the ADX, driving greater institutional flows into our market," said Saeed Al Dhaheri, managing director and chief executive of ADX.
The Abu Dhabi bourse is the first exchange in the region to use FTSE Russell as its index administrator. The partners are developing and launching new indexes to support ADX’s growth.
In January, the FTSE ADX General Index replaced the ADX General Index, and FTSE ADX sector indexes took the place of the existing sector indexes. The co-branded indexes will also support the ADX derivatives market, launched last year, and pave the way for the creation of more index-linked investment products.
The FTSE partnership is part of the bourse's ADX One strategy, which was launched in 2021 to “significantly" increase market capitalisation, strengthen corporate governance and "meet the evolving needs of global issuers and investors".
Last year, market capitalisation of ADX — one of the best performing exchanges in 2021 — more than doubled to a record Dh1.6 trillion ($435 billion).
Between 2020 and 2021, traded values (buy and sell) on the exchange increased more than five times to Dh739bn. ADX also saw several new listings last year, with the trend continuing in 2022.
The bourse's market capitalisation was Dh1.81tn at 12.15pm UAE time on Monday.
FTSE Russell’s ICB is a rules-based transparent methodology to classify companies into relevant sectors, primarily based on a company’s business, determined by its primary source of revenue.
The ICB categorises companies and securities across four classification levels, including industry, supersector, sector and subsector.
Each company is assigned to a category that best represents its business. Globally, ICB is used by bourses including the London Stock Exchange and Euronext.
“ADX’s adoption of ICB’s classification standards will support the exchange’s transparency and standards to meet the requirements of the global investment industry," said Arne Staal, chief executive of FTSE Russell.
"The step will raise international awareness on investment opportunities across the UAE’s capital markets.”
