Nasdaq Dubai will introduce trade in futures contracts based on the main DFMGI equities index of Dubai's other stock market, Dubai Financial Market, the two exchanges said on Sunday. With the exception of Kuwait, Gulf countries have been slow to introduce equity derivatives, fearing they could destabilise markets. But as low oil prices drain liquidity from the region, several bourses plan derivatives trade to attract fresh money.
Trade in DFMGI futures by institutional investors is expected to begin later this year with the support of leading United Arab Emirates brokers, the two Dubai exchanges said. Nasdaq Dubai began trading single-stock futures on shares in some of the UAE's biggest firms last September. The volume of trade in those contracts rose from 874,000 in the first six months to 1.57 million in the following six-month period.
The two exchanges said they would increase their cooperation to make Dubai an international centre for trading and clearing equity derivatives. Last week, Nasdaq Dubai agreed with global index compiler MSCI to use MSCI's regional indexes for derivatives that will be traded on Nasdaq Dubai's platform. Meanwhile, Dubai Financial Market will introduce regulated short-selling of equities in the coming period, it said without giving a precise timeframe. This could encourage trade in equity futures by increasing liquidity in the market.