Dubai: The Nasdaq Dubai exchange yesterday began trading single-stock futures on shares in some of the UAE’s biggest companies, a step towards drawing fresh money into UAE equity markets.
A lack of hedging opportunities has frustrated foreign and institutional investors in the UAE, where short-selling is restricted. As a result, some have asked investment banks to design over-the-counter options for individual stocks.
Nasdaq Dubai’s standardised, exchange-listed futures, or agreements to buy or sell shares at an agreed price on a future date, are cheaper to trade and more transparent, giving investors a clearer idea of price direction while helping UAE regulators monitor derivatives activity affecting stocks.
Trade was thin yesterday as only a small number of investors entered the futures market on its first day, but market participants said the trading system was working smoothly. Shuaa Capital is market-maker for the futures.
The exchange is initially offering futures on seven stocks accounting for almost half of traded value in UAE markets: Aldar Properties, Arabtec, DP World, Dubai Islamic Bank, Dubai Parks and Resorts, Emaar Properties and Etisalat.