ADX launches FADX 15 Futures, its first index derivatives

The move is expected to aid risk management for portfolio investors during periods of market volatility

Abu Dhabi Securities Exchange and FTSE Russell officials during the launch of FADX 15 Index futures. Photo: ADX

Abu Dhabi Securities Exchange (ADX), the Arab world's second-largest stock market by market value, launched FADX 15 futures contracts trading on its derivatives platform on Tuesday.

The futures, based on the FTSE ADX 15 (FADX 15) Index, are the first index derivatives to be listed on the ADX as part of its efforts to boost market liquidity and attract more global investors.

The FADX 15 futures are cash-settled contracts that will replicate the price performance of the benchmark FADX 15 Index, which comprises the most liquid and the largest 15 companies listed on the ADX main market.

The move will provide a “new way for investors to trade equities listed on ADX’s main market, facilitating risk management for portfolio investors during periods of market volatility”, the exchange said.

The launch will increase opportunities for investors and traders to gain “two-way market exposure” while enhancing their hedging and leveraging capabilities, Saeed Al Dhaheri, ADX’s managing director and chief executive, said.

“The roll-out of a wider array of products on our derivatives market continues to reflect our commitment to meet the evolving needs of sophisticated market participants and attract global institutional investors,” Mr Al Dhaheri said.

“We look forward to deepening our partnership with FTSE Russell to create more indices that will support the ‘ADX One’ strategy of enhancing market liquidity and providing unique growth opportunities.”

Launched in March, the FADX 15 — developed by the ADX and FTSE Russell — is a blue chip benchmark that aims to support the bourse’s recently launched derivatives market and the creation of exchange traded funds and other index-tracking investment vehicles.

It selects companies by free float adjusted market capitalisation and median trading value.

FTSE Russell, wholly owned by London Stock Exchange, is a global provider of benchmarks, analytics and data solutions with multi-asset capabilities.

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 the growth of ADX.

The FADX 15 Index futures contract will facilitate market access for international investors and enhance transparency, governance and efficiency for the UAE capital markets, Arne Staal, chief executive of FTSE Russell, said.

“Our collaboration with ADX confirms FTSE Russell’s commitment in enabling Middle Eastern financial markets to innovate and meet the growing demand for open access to data, pricing and performance metrics … we look forward to announcing a range of new benchmarks in the coming months,” Mr Staal said.

ADX launched its derivatives market in November, when trading in the single equity futures of Etisalat, First Abu Dhabi Bank, International Holding Company, Adnoc Distribution and Aldar Properties started.

The value of trades on the derivatives market surged by “more than 950 per cent” from the beginning of the year to the end of May, the bourse said.