DIFX rebrands and launches derivative trading

The launch of the much anticipated derivatives market follows a change in name for DIFX to Nasdaq Dubai.

The Dubai International Financial Exchange (DIFX) rebranded itself as Nasdaq Dubai yesterday in an attempt to encourage new listings and investors in difficult times. Nasdaq OMX Group, the world's largest exchange company, will also list its shares on Nasdaq Dubai from tomorrow. The launch of a much anticipated derivatives market has also been confirmed for today. "As the international stock exchange serving this region, Nasdaq Dubai acts as a capital markets gateway for investors all over the world, including and especially in this region," said Soud Ba'alawy, the chairman of Nasdaq Dubai and a director of Nasdaq OMX Group, which owns a one third stake in the newly rebranded exchange. Essa Kazim, the chairman of Borse Dubai and Dubai Financial Market (DFM), added that the initiative was extremely important in contributing to the development of capital markets in the region. "The markets have changed over the past few months, but our commitment to doing what is best for this region has not," said Jeffrey Singer, the chief executive of Nasdaq Dubai, in reference to the financial crisis affecting plans for the exchange. Analysts, although lauding the positive move towards needed financial reform, are sceptical that the changes will jump-start listings on the exchange. "It's still not the best environment for a company to list, but it is the best time for regulators to make improvements," said Mohieddine Kronfol, the managing director of Algebra Capital. The makeover of the exchange is meant to provide Gulf investors with access to the 3,900 companies listed on the Nasdaq OMX, according to Robert Greifeld, the chief executive of Nasdaq OMX and vice chairman of Nasdaq Dubai. "With the relationship between Nasdaq OMX and Nasdaq Dubai, investors in the Gulf region will have the opportunity to invest in these companies where appropriate, and these companies should look to the Gulf region and Dubai as a method to raise capital," said Mr Greifeld. He said that 29 companies, including Cisco Systems, Citigold Corporation and Damas had expressed a "clear and tangible interest in this market". However, a lack of liquidity is still an issue for the exchange. "Liquidity is an issue not just for Nasdaq Dubai, but across all markets in the GCC; policymakers should make deepening financial markets a top priority," said Mr Kronfol. Nasdaq Dubai will be open to derivatives trading today as well, enabling members to trade single stock futures on UAE-listed equities and a future on the FTSE/DIFX UAE 20 equity index calculated by FTSE International. The derivatives platform will be launched in a difficult financial period, although Mr Singer countered that the financial crisis should not delay a launch that has been planned for months. He added that previously, problems associated with derivatives were the result of over-the-counter (OTC) trading. "Now, derivatives trading will be regulated, transparent and Nasdaq Dubai will be behind each of the transactions; these are three key differences that don't exist for OTC, so we are taking a fundamentally different approach," he said. "In the context of providing investors in the market with more tools, the provision of derivatives and other well regulated and transparent securities is generally a step in the right direction," said Mr Kronfol. [e-mail]