Dubai: UAE stock investors can trade on a new ‘equity derivatives platform’ on DFM from next month. The stock exchange operator, Dubai Financial Market, is in the final stages of preparation for the new platform, in tandem with Nasdaq Dubai, Dubai Clear and leading brokerage houses.
The platform will introduce equity futures contracts on single stocks with tenures of one-, two- and three months. The inaugural contracts will include five of the most liquid equities on DFM – Emaar Properties, Dubai Islamic Bank, Emirates NBD, Emaar Development and Emaar Malls.
The move is part of DFM’s efforts to diversify product offerings and attract further investments. This will enable investors to diversify and hedge their portfolios and access leverage.A FUTURES CONTRACTA futures contract is an agreement between two sides to buy or sell at a specific price on future date. Each DFM contract will be based on 100 underlying shares. The platform will be expanded with additional derivatives products including index-based futures contracts.
Essa Kazim, Chairman of DFM, said: “The platform will play an essential role in broadening and deepening the market, adding new impetus to Dubai’s leading position a dynamic capital markets hub.” Investors will be able to trade equity contracts by opening an account with a DFM-licensed derivatives member.
Hassan Al Serkal, CEO of DFM, said: “We have developed a robust regulatory framework in line with international best practices that creates a favorable environment for active participation from investors and licensed brokers in futures trading and market making, noting that leading brokerage firms have shown enthusiasm to join the platform as ‘launch partners’.
Nasdaq Dubai already operates a derivatives market, which it launched in September 2016 through the introduction of UAE single stock and index-based contracts as well as Saudi single stock and index contracts.