Now buy Indian stocks in UAE without overseas account
In the first phase, DGCX has shortlisted 15 companies with single stock futures on 5 US and 10 Indian companies.
The Dubai Gold and Commodities Exchange, or DGCX, has brought global stock markets closer to the UAE by launching a new product called "Single Stocks Futures".
Investors can open an account with a UAE brokerage with around $5,000 and buy blue-chips in US and Indian markets without the hassle of remitting money to those countries. Now UAE residents have access to US and Indian stocks without opening overseas accounts for buying into Apple, Facebook, Microsoft, Google and India's Reliance, Axis Bank, Maruti, Tata Motors, and State Bank of India, among others.
There will be a transaction fee of 25.6 US cents, DGCX chief executive officer Gaurang Desai told Khaleej Times.
"It's a timely move and will provide alternatives to regional investors," Desai explained.
In the Mena region, equities are preferred and most traded instruments. The launch of the DGCX SSFs aims for increased participation from local and regional equity trading community.
In the first phase, the DGCX has shortlisted 15 companies with single stock futures on five US and 10 Indian companies.
Based on market acceptance and demand for these products, the DGCX plans to expand the list of companies covered. This will be driven by the demand and feedback from market participants and investors. The exchange launched the new product on January 15 and noticed increasing interest on daily basis, according to the CEO.
During the first seven days of the trading, the exchange witnessed total contract volume, reaching 2,406.
DGCX SSF contracts are designed as Quanto-style mini-size futures, which basically mirror the prices of the underlying stock in US dollar terms.
Each SSF has a notional value between $1,000 and $10,000 in order to encourage participation. Each SSF is assigned a multiplier based on its stock price that determines its notional value. For instance, if the price of an underlying stock in local currency is 75, then the multiplier is set as 100, implying the notional value of $7,500.
Settlement of SSF will be done in cash in US dollars, based on the closing price of the underlying stock in its primary market on the expiration day.
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