The Abu Dhabi Securities Exchange (ADX) and FTSE Russell have joined hands to develop co-branded indices to support the exchange’s recently launched derivatives market. FTC Russel is a wholly-owned subsidiary of the London Stock Exchange Group.
From January 10, 2022, the FTSE ADX General Index will replace the existing ADX General Index, and FTSE ADX sector indices will supersede the existing sector indices. ADX is the first exchange to make FTSE Russell its index administrator in the region.
Arne Stall, chief executive officer of FTSE Russell, said: “ADX is an innovative and vibrant marketplace that empowers the UAE’s economy. We are delighted to work together to strengthen the country’s capital markets with open access to data, pricing and performance metrics. Our collaboration confirms FTSE Russell’s commitment to the Middle East region and we look forward to announcing a range of new benchmarks in the coming months.”
Further new indices will also be developed together under the partnership to support ADX’s vision, which is introducing tradable new index products on its market. The exchange launched single stock futures at the end of 2021 following an agreement with NASDAQ in September to deliver matching, real-time clearing and settlement technology.
NASDAQ is a Dubai-based stock exchange that lists regional and international shares in the Middle East. Through the exchange, regional issuers can access regional and international investment. International issuers can access investment from the region through a primary or dual listing.
Saeed Hamad Al Dhaheri, chief executive officer of Abu Dhabi Securities Exchange, said: “Our partnership with FTSE Russell is part of ADX’s wide-ranging strategy to develop a dynamic exchange, which includes investment in state-of-the-art market technology and increasing the opportunity set for investors and issuers. The new range of FTSE-ADX indexes will provide robust benchmarks and support the listing of index derivatives, ETFs other index-based products on the exchange.”
ADX’s benchmark index, the ADI, crossed the 9,000-point threshold in 2021 for the first time. The benchmark rose 68 per cent last year, while the exchange’s market capitalization more than doubled to Dhs1.6 trillion with net foreign investment reaching Dhs15.2bn.
The FTSE ADX General Index will include all eligible companies listed on the ADX and ten sector-specific indices (consumer discretionary, utilities, consumer staples, energy, financial, healthcare, industrials, real estate, telecommunications, and basic materials).
The co-branding of ADX indices with FTSE Russell will enable the exchange’s stock performance measurement criteria to come in line with global standards. One immediate advantage of co-branding with FTSE will be the creation of index ETFs (Exchange Traded Fund), leading to more fund inflows into ADX shares.
Also, FTSE is reputed in the investment world. If a fund manager wants exposure to Middle East shares, they might go for an FTSE ADX ETF due to the fact that it eases the investment process. For ADX, it brings deeper liquidity and access to the largest financial institutions.
Considering FTSE’s capabilities, investors in UAE will have a number of investment products to explore across various asset classes and they will be able to make an informed decision, considering the wide variety of choices in terms of strategies and products.
This partnership will certainly enhance trading volumes at ADX and will open doors for new products to be introduced across asset classes. Retail participation in stock trading has been steadily rising across developed and emerging markets and such alliance ideally provides a global platform and global experience to UAE Investors.
