Nasdaq Dubai signs licence agreement with MSCI for development of regional index derivatives
Agreement follows rapid growth of Nasdaq Dubai’s equity futures platform
Licence paves way for launch of first regionally traded index futures on the UAE markets and provides new opportunities for investors
Nasdaq Dubai has signed a licence agreement with MSCI under which the exchange will use MSCI’s regional indices to create derivative products to be traded on the Nasdaq Dubai’s derivatives platform. The exchange initially plans to develop futures contracts based on the MSCI UAE index, which is widely tracked by international institutional investors.
The development is significant in the light of the growing importance of the region as an attractive investment destination for international investors seeking exposure to high growth emerging markets such as the UAE.
Futures on the MSCI UAE equity index, to be introduced subject to regulatory approval, will enable easy portfolio replication and hedging by global fund investors having UAE investment mandates. The products will present attractive new opportunities to regional as well as international investors.
Hamed Ali, Chief Executive of Nasdaq Dubai, said: “As we successfully completed the first year of trading single stock futures on our derivatives platform, we are keen to move to the next phase of growth and introduce index futures. The MSCI licence is in response to popular demand from our institutional brokers who help global institutional investors manage UAE-focused portfolios. Over the next couple of years, we look forward to working closely with leading capital market entities to introduce more regional index products enabling multiple opportunities for our participants. We are in discussion with potential international General Clearing Members to ensure that international institutional investors have seamless access to these products on our platform.
Robert Ansari, Head of MSCI for the Middle East, said: “The UAE equities market is one of the most important and vibrant in the Middle East and we are delighted to deepen our involvement with it as well as the markets of other regional countries. As the region’s international exchange with global investor links and an established futures market, Nasdaq Dubai is the ideal partner for this project through our licence agreement. Our indices are designed with a
strong emphasis on liquidity and investability, and include many of the leading companies in the region. ”
MSCI is a global leader in providing equity indices that are used as benchmarks by investors and are the basis of a wide variety of investible products that trade on regulated exchanges. More than 11 trillion US dollars in assets under management is estimated to be benchmarked to MSCI’s indexes worldwide. Companies that are included in the MSCI (UAE) index include Emaar Properties, First Abu Dhabi Bank, DP World, Dubai Islamic Bank and DXB Entertainments. MSCI upgraded the UAE to Emerging Market status effective from May 2014.
Nasdaq Dubai’s futures market currently comprises single stock futures on 13 leading UAE-listed companies. More than 2.5 million futures have traded since the market opened in September 2016. The volume of traded contracts rose 80% from 874,000 in the first six months of the market’s operation to reach 1,574,000 in the six-month period ended August 31, 2017.