Market making set to return to Abu Dhabi bourse

Plan involves three institutions

ABU DHABI, June 6, (RTRS): Market making is set to return to the Abu Dhabi stock exchange (ADX) later this year, sources told Reuters on Monday.

The plan is for three institutions, including National Bank of Abu Dhabi, the largest bank by assets in the United Arab Emirates, to offer “bid” and “ask” prices to increase trading volumes on the exchange, the sources said.

Such market making is considered an important service by traders, especially when there is limited or volatile trading.

NBAD had been the ADX’s sole market maker until early 2016, when it shut down the service after less than a year. Sources told Reuters in January the venture had proved unprofitable, with weak oil prices dampening trading volumes.

“There were some technical glitches, but we will be putting our gears back in motion and will be soon starting market making,” Mahmood al-Aradi, head of global markets at NBAD, said.

NBAD was awaiting approvals from the stock market regulator and the exchange to begin offering market making, he added.

Two other financial entities will also act as market makers on the exchange, an ADX source said, declining to name them.

“All three entities will start market making after summer. It will definitely lead to more liquidity and more trading,” the source told Reuters on condition of anonymity.

By offering a firm “ask” and “bid” price at any time of the trading day, “market makers” give investors the chance to move in and out of stocks, even at times of volatility or market stress.