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DIFX to Allow Listings in Dirhams and Launch Derivatives Platform

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DUBAI - Dubai International Financial Exchange (DIFX) will allow companies to list, trade and clear in UAE dirhams, according to Jeff Singer, chief executive officer.

Published: Fri 24 Oct 2008, 12:48 AM

Updated: Sun 5 Apr 2015, 2:24 PM

  • By
  • Mark T. Townsend

This combined with DIFX’s requirement for a minimum 25 per cent free float may act as strong inducement to family businesses in the UAE - a segment DIFX is keen to attract. Trading and settlement on DIFX was previously conducted in US dollars.

Speaking to a media roundtable Singer outlined a series of initiatives aimed at stimulating and simplifying access for retail investors. The exchange is planning Sunday trading at the end of November and may extend trading hours to overlap with local exchanges.

Currently the exchange is open from 11.45am to 5pm Monday to Friday.

DIFX will also launch a derivatives platform at the end of November. In a soft launch the platform will initially focus on stock and index futures.

Investors will be able to choose between DIFX single stock futures and regional futures based on DFM and ADX stocks.

In a new development for the region, investors will be able to trade index futures. In what is hoped will become the benchmark, the FTSE-DIFX UAE 20 will comprise 12 stocks from the DFM, 1 from the DIFX (DP World) and 7 from ADX. Stock options will be introduced at a later date as part of the derivatives platform. “We are licensed by the DFSA (Dubai Financial Services Authority) to trade derivatives and we have the capacity to have options over individual stocks at a future time,” added Peter FitzGerald chief operating officer of DIFX.

In a further move the DIFX is seeking to attract secondary listings and is negotiating with Nasdaq OMX to create a fast-track process for US listed companies to list on DIFX as a secondary listing.

According to analysts this will be important in solidifying DIFX’s regional status and create critical mass, a point Singer acknowledges it is well on its way to achieving. “An exchange takes a while to build, liquidity begets liquidity. We have built London in the Gulf and now we are now going to finish out Gulf in the Gulf by the end of this year”.

The exchange is the only one to offer OTC (Over the Counter) trading which has grown significantly in volume and value.From September 15 all OTC trades over $750,000 are reported. DIFX claims trading volumes for DP World have increased 364 per cent in 1 month since reporting became mandatory (see graph).

DIFX allows short selling but in September banned ‘naked’ short selling a process that prevents anyone from selling a stock unless they have borrowed it or can show they have another way of delivering it.

“Ultimately naked shorting can drive prices down to zero,” added Singer. A similar decision was taken by regulators in the US and Europe following the collapse of Lehman Brothers.

It is likely the DIFX will also re-brand itself following the Nasdaq OMX acquisition and will be keen to harness the well-known international brand.

DIFX faces a difficult global economic backdrop with the outlook for initial public offerings unpredictable. Pursuing the secondary listings market and not relying on a ‘pipeline’ could mark a significant change in strategy that could be compelling for both US and Middle East investors.

mark_townsend@khaleejtimes.com



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