Nasdaq Dubai has admitted global broker Bank of America Merrill Lynch (BAML) as a general clearing member (GCM) for its equity derivatives market, the continuing growth of which it claims will boost liquidity across the entire bourse.
By joining Nasdaq Dubai as a GCM, BAML will be able to clear the trades of other brokers trading on the exchange's equity derivatives segment as well as its own.
“Bank of America Merrill Lynch's arrival as a GCM is a landmark in the development of our equity derivatives platform,” said Dean Noble, head of business development at Nasdaq Dubai. “The market has huge potential for growth in a region where hedging mechanisms are in short supply and investors need to offset risk. A vibrant equity derivatives market can also stimulate trading volumes in the underlying equities themselves, in times of falling as well as rising prices.”
Nasdaq Dubai offers futures based on the FTSE Nasdaq Dubai UAE 20 share index and 21 companies in the United Arab Emirates listed on the Dubai Financial Market (DFM) and Abu Dhabi Securities Market, as well as its own.
“As the first GCM on the UAE's only on-exchange equity derivatives market, we look forward to playing a leading role in facilitating increased trading capacity within the region. Nasdaq Dubai's equity derivatives platform provides investors with unique tools to hedge their exposure to shares of UAE and other Middle East companies,” said Brooks Stevens, head of EMEA futures and derivatives clearing services at BAML.
Nasdaq Dubai is two-thirds owned by DFM, with the remaining third owned by Borse Dubai, the government-owned parent company of DFM.
Nasdaq OMX bought a one-third stake in the Dubai International Financial Exchange in February 2008 and rebranded the borse in November 2008 before selling its holding to DFM in December 2009 in return for a 1% stake in the new owner and the right to appoint a director.