Abu Dhabi’s main financial trading exchange, the Abu Dhabi Securities Exchange (ADX), has reported that it has completed the first listing of a government bond. The listing was carried out in conjunction with the city’s Department of Finance (DOF) and will allow traders to trade the bond in the London market. The move highlights the city’s status as a regional center for the trading of financial instruments.
The exchange reported that the total amount of the bond was listed at $1.5 billion with a maturity date of 2019. The latest offering complements the county’s wider strategy of providing participants with access to a diverse range of instruments. The listing follows the approval of regulations by the main financial watchdog, the Securities and Commodities Authority (SCA) for the issuance of local debt instruments and their listing on ADX. The current listing allows traders to trade on both the ADX and London Stock Exchange through the dual listing of the product.
H.E. Mohammed Sultan Bin Ghannoum Al Hameli, Director General of Department of Finance-Abu Dhabi, pictured, a government official commented about the new offering in a statement, he said: “The dual listing of the bonds will help to enhance the investment exposure of the local markets and to reinforce Abu Dhabi’s position as a regional and international financial center able to attract investment and provide investors with diverse options in the securities and bond markets.”
Details issued by the ADX show that the National Bank of Abu Dhabi (NBAD), a leading domestic banking institute, has one of the strongest rankings in the Middle Eastern region with Aa3 from Moody’s, AA- from Standard & Poor’s (S&P) and AA- from Fitch. The bank will act as ADX’s account operator. Furthermore, the bank will manage all settlement and clearing functionality through ADX’s participant account at Euroclear, which specializes in the settlement of securities transactions as well as the safekeeping and asset servicing of these securities. The current listing of government bonds will be limited to Qualified Investor Buyers (QIB).
The latest product extension follows on from the exchange’s developments in its technology infrastructure. Earlier this year the venue collaborated with NASDAQ OMX to launch the popular X-Stream trading terminal, thus allowing greater functionality for automated and algorithmic trading.
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UAE is strategically positioned as a center place for trade and commerce, sitting at the crossroads of South Asia, North Africa and the Middle East. The UAE has positioned itself as the main business center for Indian business people abroad, its location and accessibility enabling it to reach over 1.8 billion people
Dubai, one of UAE’s main business and tourist locations, has been a magnet for currency derivatives brokers setting up shop by taking advantage of the free and open business framework the city offers, the country entered the financial trading arena in early 2,000s.
Over the last decade it has come a long way with the country’s main multi-asset derivatives exchange, the DGCX, launching the first overseas Indian rupee FX futures contract in 2007. India is one of the fastest growing markets for listed FX trading, with four venues offering the dollar rupee future contract onshore. Furthermore, India has been strengthening its rankings on the BIS’s table for most active players international currency markets. In 2013, the BIS reported that the average daily trading volume in Indians FX markets was $53 billion, putting it at 20th position globally.
Abu Dhabi, an oil rich economy reported 7.7% GDP growth in 2013, the current spike in the price of oil has helped the city further develop its economy. Government data shows that Abu Dhabi holds 9% of the world’s proven oil reserves.
“The Emirate of Abu Dhabi leads the economies of the Middle East in the field of credit rating. The Emirate also posses the confidence of investors from all around the world as the Emirate has preserved its ranking among the least risky economies in the credit markets as well as being the most capable of fulfilling its financial commitments in the past years,” added Mr. Al Hameli.
Leading multi-asset FX & CFD brokerage firm, Saxo Bank, set up an office in Abu Dhabi to complement its Dubai operation as it enhances its Middle Eastern presence.
Abu Dhabi’s gradual entrance as a financial center comes as no surprise after the emirate bailed out its younger brother, Dubai, from financial misery in 2008. The city’s ongoing reforms and developments are expected to filter out to the financial derivatives sector with Abu Dhabi playing a strong role in the trading of FX derivatives.