Abu Dhabi's ADQ launches market maker to boost ADX

The independent market making company has begun trading on the local bourse

Following the MoU, ADX became the first Arab exchange to establish commercial ties with Israel. EPA 

Abu Dhabi holding company ADQ launched Q Market Makers, an entity that will tap into a Dh1 billion ($272.47m) fund to support liquidity on the emirate’s bourse.

Market makers are crucial players that help create a market for investors to buy or sell securities on a stock exchange, in turn boosting trading activity.

Typically large banks or entities with financial backing, market makers ensure there is enough volume of trading for deals to occur seamlessly. They buy and sell if investors pay a specific price, which usually reflect market supply and demand dynamics.

ADQ said yesterday that QMM had begun operating on the Abu Dhabi Securities Exchange.

The "independently managed" company will have access to funding allocated for market making earlier by the Abu Dhabi government, as part of its economic stimulus package for the emirate.

This funding – set up under Abu Dhabi’s Dh50bn Ghadan 21 economic package – will help boost liquidity and balance supply and demand for stocks on the emirate’s capital markets, it said.

A liquid exchange “instils greater interest and confidence in the capital markets, attracting order flow and listings”, ADQ said. This in turn provides a credible platform for companies to raise capital and expand their shareholder base.

“Capital markets with more liquidity and efficiency are essential for any country to achieve economic diversification, and help create a business system that is more competitive, transparent and engaging with the global economy through expertise and adoption of best global practices,” said Mohammed Al Shorafa, a member of the Abu Dhabi Executive Council and chairman of the ADX.

“The launch of Q Market Makers is a significant milestone for [the ADX], paving the way for increasing market activities at all levels.”

The bourse is working with the government on a comprehensive plan to develop the financial sector, one of the main contributors to the emirate’s non-oil economy.

It is expected to record an increase in initial public offerings from family businesses and government-related institutions, as well as a rise in the number of shares in companies that float freely, Mr Al Shorafa told The National in an interview published on Sunday.

The ADX is also looking to attract more international listings as a long-term strategy and is developing a series of initiatives, particularly on cross-border regulations, to draw more foreign investments, he said.