TA Abu Dhabi Securities Exchange (ADX) recently announced its new market technology deal with the Nasdaq and its intention to introduce equity and index futures by the end of 2021 to meet the demands of sophisticated global investors . Nasdaq technology will lay the foundation for successful and resilient derivatives trading and clearing services on the exchange.
We caught up with Saeed Hamad Al Dhaheri, CEO of ADX, to learn more about their tech journey.
Can you tell us about your market, your vision and your strategy for future growth?
ADX is the second largest market in the MENAT region in terms of market capitalization. We play a pivotal role in Abu Dhabi’s ongoing economic diversification strategy by connecting investors around the world to the growth of the Emirate. As of June 2021, ADX had 96 securities listed on its primary and secondary markets, including debt securities and ETF products.
We are also one of the youngest exchanges in the region, celebrating our 20e anniversary later this year. But we have great ambitions for the years to come. Earlier this year, we launched our “ADX One” strategy, which aims to double market capitalization over the next three years by investing in market infrastructure and bringing even more sophisticated investment products to the region. .
We are making good progress towards our goal. The market capitalization of the exchange rose 88% in the first eight months of the year to reach AED1.3 trillion in the first half of 2021, driven by new listings and increased demand for Abu shares. Dhabi, which made the ADSMI benchmark one of the most successful in the world. clues around the world.
What are the main drivers behind your decision to introduce derivatives trading and launch a central clearing house (CCP)?
The introduction of central counterparty services will help us take on counterparty credit risk and provide clearing and settlement services for transactions. This is important because it will bring greater stability to the market and reduce the operational risk and potential default of participants.
This is part of our strategy to create greater choices for investors while building strong governance structures. Over the past few years, we have introduced a diverse range of new products and services to the market, including Market Making, Hedged Short Selling (CSS), and Securities Lending and Borrowing (SLB).
We are working on the introduction of equity and index futures by the end of this year to better meet the demands of sophisticated global investors. The introduction of a derivatives market will also allow institutional investors to hedge their investments so that they can execute more complex trading strategies.
How the recently announced technology investment with the Nasdaq help you achieve your strategy?
Our technology partnership with the Nasdaq dates back to the early 2000s. Our latest technology agreement with the Nasdaq revolves around two key investments that will allow ADX to provide efficient and resilient derivative trading and clearing services to its clients. .
The Nasdaq trading solution includes one of the world’s most widely used matching engines and combines performance and extensive functionality.
The Clearing Solution is a proven and flexible system that provides clearing, settlement and risk management functions to help ADX effectively manage its clearing operations. Nasdaq clearing technology includes clearing, risk management, collateral management and settlement functionality in a single application.
These two cutting-edge and cost-effective technological products will improve the user experience for our customers as well as for our own technology teams.
What does this investment mean for your investors and Abu Dhabi capital markets?
These investments are just the last step in our journey towards creating a technologically advanced exchange that acts as a middleman between Abu Dhabi companies and global capital, thus supporting Abu Dhabi’s strategic goal of diversifying economy and broaden sources of long-term funding.
Our goal is to make the online experience for investors and issuers both fluid and intuitive. So we’re modernizing all of our apps, from our website to our trading and clearing platforms, and seeing how we can reorganize and automate interactions with clients so that they are accessible from one place with the least amount of human interaction. possible.
Recently, we designed our electronic financial information system and launched an enhanced online participation and remote voting service for listed companies through our Sahmi digital platform. All of these features were designed with our customers in mind.
What are you passionate about for the future and is there something for the future that you can share with our audience?
It’s exciting to see more and more Abu Dhabi companies increasing their foreign ownership limits. This decision promotes the stability and liquidity of shares listed on the ADX by allowing foreign institutions to take more significant long-term positions and by increasing the diversity of the shareholder base.
This is very much in line with the broader strategic direction of Abu Dhabi. The government has put in place a comprehensive set of business-friendly policies designed to make the Emirate an attractive destination for business and capital. These initiatives include the introduction of 100% foreign ownership in enterprises of 122 economic activities in 13 sectors and the launch of new visa categories to ensure that Abu Dhabi is one of the easiest places in the world to reach. to install.
ADX investors enjoy the benefits of exposure to an emerging market with high growth but with relatively lower risk. ADX also offers global investors the opportunity to participate in the high growth activities of some of the best companies in the Emirate of Abu Dhabi.