Dubai Financial Market (DFM) and Nasdaq Dubai have signed a licence agreement under which futures contracts linked with the DFM General Index (DFMGI) will be traded on Nasdaq Dubai’s equity futures market.

The first of its kind launch in the region of the index futures is a core element of the exchanges’ joint strategy to offer institutional and retail investors attractive new investment opportunities and a wider range of products.

Subject to regulatory approval, trading of DFMGI futures is expected to begin later this year with the support of leading UAE brokers, targeted at professional and institutional investors to enable them to take a macro view on the DFM market.

The DFMGI tracks a basket of leading DFM-listed companies, providing broad exposure to the UAE economy in vibrant sectors including property, banking, telecoms, insurance and transport.

Essa Kazim, Chairman of DFM, said: "The diversification of products range and offering new investment opportunities to our enormous investor base is one of the main pillars of DFM’s strategy 2021. In this context, we believe that the launch of futures on the DFMGI will be a milestone in the development of Dubai’s financial landscape, by offering versatile products that are tailored to the needs of international as well as regional investors. This new initiative stems from the unique links between DFM and Nasdaq Dubai that created a favorable framework for various market participants, enabling them to actively participate in Dubai’s capital market. It also further strengthens Dubai’s position as an international capital markets hub."

DFM will introduce regulated short-selling of equities in coming period. This move will support increased liquidity in both equities and equity futures.

All DFM and Nasdaq Dubai brokers can apply to be Members of the futures market, with access to all eligible individual and institutional investors to trade.

Hamed Ali, Chief Executive of Nasdaq Dubai, said: "The addition of a DFMGI-linked product to Nasdaq Dubai’s equity futures represents a substantial expansion of the market and widens the opportunities for investors who wish to hedge or invest, as well as make gains whether the value of the index is falling or rising. The two exchanges will further increase their cooperation in order to make Dubai a leading international centre for trading and clearing a wide range of equity derivatives."

Nasdaq Dubai last week announced a licence agreement with MSCI under which the exchange will use MSCI’s regional indices to create derivative products to be traded on Nasdaq Dubai’s derivatives platform. The exchange initially plans to develop futures contracts based on the MSCI UAE index, which is widely tracked by international institutional investors.