When Abdul Wahed Al Fahim, Chairman of Nasdaq Dubai, rang the opening bell to celebrate the launch of its single stock futures market, it signified futures being offered on seven companies: Aldar Properties, Arabtec Holding, DP World, Dubai Islamic Bank, Dubai Parks and Resorts, Emaar Properties and Etisalat.
Nasdaq Dubai is the only exchange that offers futures on shares of UAE-listed companies, and the list of companies involved is expected to grow. To support the launch, Nasdaq Dubai has introduced a series of training courses through its academy to help investors understand single stock futures and how to trade them, as well as a simulated trading game and other educational material. The exchange encourages informed and responsible trading by investors who understand the potential losses as well as potential gains of their positions.
Hamed Ali, Chief Executive of Nasdaq Dubai, commented: “Leverage on futures gives investors the possibility to make larger gains than if they had traded the underlying shares, and they can also use futures to protect their existing wealth. We are in discussions with a number of leading regional and international brokerages that wish to join the platform as it expands, either as market makers or to provide broking services to their clients.”
An equity futures contract is a commitment to buy or sell shares at a specific price at a specific future date. They can be traded through a broker, just like shares themselves. Tens of billions of dollars of equity futures are traded on exchanges every year in the US, Europe and Asia.
Read the September 2016 issue of Business Review Middle East magazine