Abu Dhabi Stock Exchange aims to start futures trading next year

Saudi Arabia’s stock exchange announced last week it will introduce index-futures trading next year

Abu Dhabi’s stock exchange is joining a race to introduce derivatives as Gulf bourses, including Kuwait and Saudi Arabia put strategies in place to lure more investors.

The Abu Dhabi Securities Exchange, known as ADX, plans to enable trading of futures contracts on single stocks in 2019, and they may eventually be available for the benchmark ADX General Index, Rashid Al Beloushi, CEO of ADX, said Monday in an interview, without specifying any starting dates.

Saudi Arabia’s stock exchange, the biggest in the Middle East, announced last week it will introduce index-futures trading next year, with the contracts and options on single stocks expected to be available by 2020. Investors can already trade futures on UAE company stocks listed on the Nasdaq Dubai exchange, but liquidity is thin. The derivatives will also be part of reforms Kuwait is undertaking that may result in the exchange’s upgrade to emerging-markets status at MSCI Inc. next year.

“We are now thinking, how is the best set-up for the derivatives market?” Al Beloushi said outside a conference in London. Introducing derivatives marks a “radical” change, as “systemwise, you can get them tomorrow. But it is the culture that you need to develop, the players you need to have,” to create a viable product.

Abu Dhabi’s main stock gauge has jumped more than 13 per cent this year, with banks contributing the most to the gain because of mergers and acquisitions. The performance compares to a drop of about 12 per cent for the MSCI Emerging Markets Index.

ADX plans to enable trading of futures contracts on single stocks in 2019, and they may eventually be available for the benchmark ADX General Index.