Nasdaq Dubai Expands Futures Market with Three New Contracts
- The three firms, which includes NBAD the largest banking entity in the UAE, join nine other leading UAE-listed companies.
Nasdaq Dubai has added National Bank of Abu Dhabi (NBAD), Dubai Financial Market (DFM) and Dubai Investments (DIC) to its roster of single-stock equity futures. The new additions mean there will be 12 companies on which investors can trade futures contracts.
The three firms, which includes NBAD the largest banking entity in the UAE, join nine other leading UAE-listed companies: Emaar Properties, DXB Entertainments, Abu Dhabi Commercial Bank, Aldar Properties, Arabtec Holding, DP World, Dubai Islamic Bank, Etisalat and Union Properties.
As an expanding and liquid Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. Read this Term with a broad international investor base, Nasdaq Dubai provides attractive opportunities to make markets in a variety of securities. Market making services on the new futures contracts are provided by SHUAA Capital (DFM: SHUAA), a Dubai-based financial services provider, which has been market making on all futures together with Arqaam Capital, EFG Hermes, Mena Corp Financial Services and Mubasher Financial Services, since the market opened on September 2016.
Lack of experience
The lack of listed equity derivatives in the UAE was prompting investors to ask international investment banks to design over-the-counter options for individual stocks. As such, trading in listed futures and options are much more transparent, allowing the local bourse and UAE regulators to monitor derivatives activity affecting local stocks.
In addition, Nasdaq Dubai plans to expand its offerings in the future to include other derivatives products, such futures on shares listed on MENA and international markets as well as options.
Although the introduction of the futures exchange was a major development in the region, but there could be also some hurdles to overcome before Nasdaq Dubai could perform this kind of function. The challenges are clearly highlighted in the experience of the Nasdaq Dubai market, which operated until recently mainly as a thriving market for sukuk and other debt trading.
The Gulf region in general falls behind the pace of other emerging markets in formalizing the regulatory and operational aspects of derivatives markets’ microstructures. With the exception of Kuwait, the region’s equity markets have been slow to introduce futures and options.
Hedge and Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders need to rely on leverage to make financial trading viable. Generally, the higher the fluctuation of an instrument, the larger the potential leverage offered by brokers. The market which offers the most leverage is undoubtedly the foreign exchange market, since currency fluctuations are relatively tiny. Of course, traders can select their account leverage, which usually varies from 1:50 to 1:200 on most forex brokers, although many brokers now offer up to 1:500 leverage, meaning for every 1 unit of currency deposited by the trader, they can control up to 500 units of that same currency. For example, if a trader was to deposit $1000 into a forex broker offering 500:1 leverage, it would mean the trader could control up to five hundred times their initial outlay, i.e. half a million dollars. Likewise, if an investor using a 1:200 leveraged account, was trading with $2000, it means they would be actually controlling $400,000, i.e. borrowing an additional $398,000 from the broker. Assuming this investment rises to $402,000 and the trader closes their trade, it means they would have achieved a 100% ROI by pocketing $2000. With leverage, the potential for profit is clear to see. Likewise, it also gives rise to the possibility of losing a much greater amount of their capital, because, had the value of the asset turned against the trader, they could have lost their entire investment.FX Regulators Clamp Down on Leverage Offered by BrokersBack in multiple regulators including the United Kingdom’s Financial Conduct Authority (FCA) took material measures to protect retail clients trading rolling spot forex and contracts for difference (CFDs). The measures followed after years of discussion and the result of a study which showed the vast majority of retail brokerage clients were losing money. The regulations stipulated a leverage cap of 1:50 with newer clients being limited to 1:25 leverage. In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders need to rely on leverage to make financial trading viable. Generally, the higher the fluctuation of an instrument, the larger the potential leverage offered by brokers. The market which offers the most leverage is undoubtedly the foreign exchange market, since currency fluctuations are relatively tiny. Of course, traders can select their account leverage, which usually varies from 1:50 to 1:200 on most forex brokers, although many brokers now offer up to 1:500 leverage, meaning for every 1 unit of currency deposited by the trader, they can control up to 500 units of that same currency. For example, if a trader was to deposit $1000 into a forex broker offering 500:1 leverage, it would mean the trader could control up to five hundred times their initial outlay, i.e. half a million dollars. Likewise, if an investor using a 1:200 leveraged account, was trading with $2000, it means they would be actually controlling $400,000, i.e. borrowing an additional $398,000 from the broker. Assuming this investment rises to $402,000 and the trader closes their trade, it means they would have achieved a 100% ROI by pocketing $2000. With leverage, the potential for profit is clear to see. Likewise, it also gives rise to the possibility of losing a much greater amount of their capital, because, had the value of the asset turned against the trader, they could have lost their entire investment.FX Regulators Clamp Down on Leverage Offered by BrokersBack in multiple regulators including the United Kingdom’s Financial Conduct Authority (FCA) took material measures to protect retail clients trading rolling spot forex and contracts for difference (CFDs). The measures followed after years of discussion and the result of a study which showed the vast majority of retail brokerage clients were losing money. The regulations stipulated a leverage cap of 1:50 with newer clients being limited to 1:25 leverage. Read this Term opportunities
Nasdaq Dubai launched its equity derivatives market in November 2008 but this coincided with the global financial crisis, so the trading failed to gain critical mass.
Hamed Ali, Chief Executive of Nasdaq Dubai, commented: “The addition of three more prominent UAE companies, whose equities are widely traded, adds further depth and breadth to our futures market as a growing range of investors make use of the opportunities it provides for hedging and investment. As the market expands further in coming weeks and months, including the addition of equity indices, investors will be able to make increasing use of the benefits of leverage, and the capacity to make gains when underlying shares are falling as well as rising.”
Jassim Alseddiqi, Chairman of SHUAA Capital, said: “SHUAA Capital is proud to see the UAE’s burgeoning futures market enter the second phase of its development. Our provision of market making services for three more blue chip corporate entities will provide a significant boost to Nasdaq Dubai’s futures offering, enabling investors to benefit from an increasingly broad range of opportunities. SHUAA Capital’s expertise, experience and resources are playing a key role in the ongoing development of the UAE’s capital markets, and we look forward to working with Nasdaq Dubai and its constituent companies over the coming months to continue enhancing and expanding the emirate’s and the UAE’s investment landscape.”
Nasdaq Dubai has added National Bank of Abu Dhabi (NBAD), Dubai Financial Market (DFM) and Dubai Investments (DIC) to its roster of single-stock equity futures. The new additions mean there will be 12 companies on which investors can trade futures contracts.
The three firms, which includes NBAD the largest banking entity in the UAE, join nine other leading UAE-listed companies: Emaar Properties, DXB Entertainments, Abu Dhabi Commercial Bank, Aldar Properties, Arabtec Holding, DP World, Dubai Islamic Bank, Etisalat and Union Properties.
As an expanding and liquid Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectively relevant with real-time pricing.Depending upon where you reside, an exchange may be referred to as a bourse or a share exchange while, as a whole, exchanges are present within the majority of countries. Who is Listed on an Exchange?As trading continues to transition more to electronic exchanges, transactions become more dispersed through varying exchanges. This in turn has caused a surge in the implementation of trading algorithms and high-frequency trading applications. In order for a company to be listed on a stock exchange for example, a company must divulge information such as minimum capital requirements, audited earnings reports, and financial reports.Not all exchanges are created equally, with some outperforming other exchanges significantly. The most high-profile exchanges to date include the New York Stock Exchange (NYSE), the Tokyo Stock Exchange (TSE), the London Stock Exchange (LSE), and the Nasdaq. Outside of trading, a stock exchange may be used by companies aiming to raise capital, this is most commonly seen in the form of initial public offerings (IPOs).Exchanges can now handle other asset classes, given the rise of cryptocurrencies as a more popularized form of trading. Read this Term with a broad international investor base, Nasdaq Dubai provides attractive opportunities to make markets in a variety of securities. Market making services on the new futures contracts are provided by SHUAA Capital (DFM: SHUAA), a Dubai-based financial services provider, which has been market making on all futures together with Arqaam Capital, EFG Hermes, Mena Corp Financial Services and Mubasher Financial Services, since the market opened on September 2016.
Lack of experience
The lack of listed equity derivatives in the UAE was prompting investors to ask international investment banks to design over-the-counter options for individual stocks. As such, trading in listed futures and options are much more transparent, allowing the local bourse and UAE regulators to monitor derivatives activity affecting local stocks.
In addition, Nasdaq Dubai plans to expand its offerings in the future to include other derivatives products, such futures on shares listed on MENA and international markets as well as options.
Although the introduction of the futures exchange was a major development in the region, but there could be also some hurdles to overcome before Nasdaq Dubai could perform this kind of function. The challenges are clearly highlighted in the experience of the Nasdaq Dubai market, which operated until recently mainly as a thriving market for sukuk and other debt trading.
The Gulf region in general falls behind the pace of other emerging markets in formalizing the regulatory and operational aspects of derivatives markets’ microstructures. With the exception of Kuwait, the region’s equity markets have been slow to introduce futures and options.
Hedge and Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders need to rely on leverage to make financial trading viable. Generally, the higher the fluctuation of an instrument, the larger the potential leverage offered by brokers. The market which offers the most leverage is undoubtedly the foreign exchange market, since currency fluctuations are relatively tiny. Of course, traders can select their account leverage, which usually varies from 1:50 to 1:200 on most forex brokers, although many brokers now offer up to 1:500 leverage, meaning for every 1 unit of currency deposited by the trader, they can control up to 500 units of that same currency. For example, if a trader was to deposit $1000 into a forex broker offering 500:1 leverage, it would mean the trader could control up to five hundred times their initial outlay, i.e. half a million dollars. Likewise, if an investor using a 1:200 leveraged account, was trading with $2000, it means they would be actually controlling $400,000, i.e. borrowing an additional $398,000 from the broker. Assuming this investment rises to $402,000 and the trader closes their trade, it means they would have achieved a 100% ROI by pocketing $2000. With leverage, the potential for profit is clear to see. Likewise, it also gives rise to the possibility of losing a much greater amount of their capital, because, had the value of the asset turned against the trader, they could have lost their entire investment.FX Regulators Clamp Down on Leverage Offered by BrokersBack in multiple regulators including the United Kingdom’s Financial Conduct Authority (FCA) took material measures to protect retail clients trading rolling spot forex and contracts for difference (CFDs). The measures followed after years of discussion and the result of a study which showed the vast majority of retail brokerage clients were losing money. The regulations stipulated a leverage cap of 1:50 with newer clients being limited to 1:25 leverage. In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders need to rely on leverage to make financial trading viable. Generally, the higher the fluctuation of an instrument, the larger the potential leverage offered by brokers. The market which offers the most leverage is undoubtedly the foreign exchange market, since currency fluctuations are relatively tiny. Of course, traders can select their account leverage, which usually varies from 1:50 to 1:200 on most forex brokers, although many brokers now offer up to 1:500 leverage, meaning for every 1 unit of currency deposited by the trader, they can control up to 500 units of that same currency. For example, if a trader was to deposit $1000 into a forex broker offering 500:1 leverage, it would mean the trader could control up to five hundred times their initial outlay, i.e. half a million dollars. Likewise, if an investor using a 1:200 leveraged account, was trading with $2000, it means they would be actually controlling $400,000, i.e. borrowing an additional $398,000 from the broker. Assuming this investment rises to $402,000 and the trader closes their trade, it means they would have achieved a 100% ROI by pocketing $2000. With leverage, the potential for profit is clear to see. Likewise, it also gives rise to the possibility of losing a much greater amount of their capital, because, had the value of the asset turned against the trader, they could have lost their entire investment.FX Regulators Clamp Down on Leverage Offered by BrokersBack in multiple regulators including the United Kingdom’s Financial Conduct Authority (FCA) took material measures to protect retail clients trading rolling spot forex and contracts for difference (CFDs). The measures followed after years of discussion and the result of a study which showed the vast majority of retail brokerage clients were losing money. The regulations stipulated a leverage cap of 1:50 with newer clients being limited to 1:25 leverage. Read this Term opportunities
Nasdaq Dubai launched its equity derivatives market in November 2008 but this coincided with the global financial crisis, so the trading failed to gain critical mass.
Hamed Ali, Chief Executive of Nasdaq Dubai, commented: “The addition of three more prominent UAE companies, whose equities are widely traded, adds further depth and breadth to our futures market as a growing range of investors make use of the opportunities it provides for hedging and investment. As the market expands further in coming weeks and months, including the addition of equity indices, investors will be able to make increasing use of the benefits of leverage, and the capacity to make gains when underlying shares are falling as well as rising.”
Jassim Alseddiqi, Chairman of SHUAA Capital, said: “SHUAA Capital is proud to see the UAE’s burgeoning futures market enter the second phase of its development. Our provision of market making services for three more blue chip corporate entities will provide a significant boost to Nasdaq Dubai’s futures offering, enabling investors to benefit from an increasingly broad range of opportunities. SHUAA Capital’s expertise, experience and resources are playing a key role in the ongoing development of the UAE’s capital markets, and we look forward to working with Nasdaq Dubai and its constituent companies over the coming months to continue enhancing and expanding the emirate’s and the UAE’s investment landscape.”