Derivatives: Gulf's nascent futures market still needs to develop | ZAWYA MENA Edition

Derivatives: Gulf's nascent futures market still needs to develop | ZAWYA MENA Edition:

With the Dubai and Abu Dhabi equity markets having lost ground in the second half of 2018, this should have provided fertile ground for investors to use equity shorts to hedge their portfolios.

Indeed, in November, futures volumes on the Nasdaq Dubai jumped 119 percent compared with the previous month, to 20.48 million United Arab Emirates dirhams ($5.6 million). But given that the combined turnover of stocks on the Abu Dhabi Securities Exchange (ADX) and the Dubai Financial Market (DFM) was over 8 billion dirhams, the volume of futures is “extremely irrelevant,” Marwan Shurrab, senior vice-president and head of HNW and retail equities at Al Ramz Capital told Zawya in a telephone interview last month.

“[To be relevant] the future volumes need to be a percentage of the total turnover. In certain mature markets, the futures market actually does multiples of the real equity market,” he said.