DIFX unveils measures to lure investors

Dubai International Financial Exchange moves aimed at realising its ambition of becoming an international exchange platform.

In a move to boost investor interest, the Dubai International Financial Exchange (DIFX) has unveiled an array of new rules and product offerings designed to attract retail investors and broaden the participation of institutional investors. The package - including trading in dirhams for the first time starting today, extended trading hours and the launch next month of a derivatives market for options and futures - represents some of the most significant changes that the exchange has made since it launched three years ago. The new futures contract will be based on the FTSE DIFX UAE 20 Index. The DIFX said it would also launch futures contracts based on the individual shares of DIFX-listed Dubai Ports World, 12 stocks listed on the Dubai Financial Market (DFM) - which already trades in dirhams - and seven stocks listed on the Abu Dhabi Securities Exchange (ADX). The package was announced by the DIFX's recently appointed chief executive, Jeffrey Singer, who came from Nasdaq, the US exchange that the DIFX's parent company, Bourse Dubai, has linked up with in a global strategic alliance. "We have a lot of institutional liquidity but need to attract retail liquidity; these regulations have been put in place to facilitate that end. Our goal over the next few years will be to increase the number of companies with secondary listings and grow and expand the exchange," said Mr Singer, who joined the DIFX in July. The DIFX is a key building block in Dubai's ambitions to become a major global financial centre, but has struggled to grow trading volumes and attract the robust participation of global institutional investors. The DIFX has 16 listed companies and Nasdaq OMX owns 33 per cent of the exchange as part of an effort to attract foreign interest. Companies currently listed in dollars will be able to convert the listings to dirhams later this year, pending shareholder approval. Nasser Saidi, the DIFC's chief economist, said one impetus for allowing dirham trading was to give institutional investors more flexibility as the GCC moved towards a common currency, a project closely linked by some investors to the possibility of currency revaluations in the region. "The inability for us to list in dirhams on the DIFX created the incentive to make the change; this came during a period when the dollar was depreciating, so when investors were given a choice between dollar-denominated listings and those in dirhams, they preferred dirhams," said Mr Saidi. "Now there are no restrictions so international investors can go into dirhams and it will be a very attractive marketplace." * with Reuters [e-mail]