UAE: Abu Dhabi Securities Exchange signs agreement with Nasdaq
The deal will deliver technological solutions to launch a derivatives market
Abu Dhabi Securities Exchange (ADX) announced on Wednesday that it has taken a key step towards launching a derivatives market this year by signing an agreement with Nasdaq (Nasdaq: NDAQ) to deliver marketplace solutions, including matching, real-time clearing and settlement technology.
ADX, which aims to double market capitalization over the next three years, is rapidly expanding asset classes and developing new offerings for both regional and international investors. Market capitalization of the Abu Dhabi Securities Exchange had increased 84% from the beginning the of year till mid-August to more than AED 1.3 trillion. While Abu Dhabi Index (ADI), the exchange's benchmark index, has gained 52% year to date, surpassing leading global exchanges.
The exchange plans to launch single stock futures and index futures in the fourth quarter of this year before expanding to a wider range of derivative products. The initiative will further diversify investment avenues and provide investors with hedging tools for effective risk management.
The derivatives market will be accompanied by introducing central counterparty clearing (CCP) to promote clearing efficiency, stability and confidence in the market.
Mohammed Ali Al Shorafa Al Hammadi, Chairman of ADX, commented: "ADX is on a journey to significantly enhance liquidity and expand market capitalization through our 'ADX One' strategy, which provides a clear road map for further development of a vibrant exchange. By deepening our capital markets and increasing the range of innovative products and services, we are supporting the UAE's strategy for economic diversification, providing growth companies with favorable access to global capital and allowing investors to participate in the UAE's ambitions."
Saeed Hamad Al Dhaheri, Chief Executive Officer of ADX, added: "Our commercial relationship with Nasdaq dates to ADX's establishment in 2000, and over the last two decades, we have collaborated on a range of initiatives to ensure investors benefit from efficient market infrastructure technology. We are confident that the launch of a derivatives market will be another important milestone, empowering investors on the exchange who wish to implement sophisticated trading strategies. Our strategy is to ensure that investors and issuers derive significant benefits of a sophisticated marketplace by investing further in technology, broadening our offering, and attracting a wider range of institutional investors."
Lars Ottersgård, Executive Vice President and Head of Nasdaq Market Technology, said: "ADX continues to be an industry leader in innovating and evolving the Middle East's capital market ecosystem. By leveraging Nasdaq's robust and flexible technology solutions, ADX can further evolve its endeavours to expand into a leading derivatives marketplace and one of the largest multi-asset marketplaces in the Middle East. We look forward to progressing our technology partnership and supporting ADX in their growth journey."
Nasdaq's end-to-end mission-critical technology powers more than 2,300 companies in 50 countries, spanning the world's financial industry, including capital markets infrastructure operators, market participants, banks, and regulators.
The ADX One strategy, launched at the start of 2021, aims to double the exchange's market capitalization over the next three years by bringing a broader offering of products and services to market and investing in state-of-the-art infrastructure in partnership with global market leaders. As of August 2021, ADX has 78 companies listed on its main and Second Market.
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