NO 240 – FEBRUARY 2013
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WFE Focus February 2013
WFE INTERVIEWS WITH THE ABU DHABI SECURITIES EXCHANGE
RASHED AL BALOUSHI
CEO
Abu Dhabi Securities Exchange

FOCUS: Could you give us a bit of background about your exchange?

ADX: The Abu Dhabi Securities Exchange (ADX) was established on November 15 of the year 2000 by Local Law No. (3) Of 2000, the provisions of which vest the market with a legal entity of autonomous status, independent finance and management. The Law also provides ADX with the necessary supervisory and executive powers to exercise its functions. ADX is a market for trading securities; including shares issued by public joint stock companies, bonds and Sukuk issued by governments or corporations, Exchange Traded Funds (ETF), and any other financial instruments approved by the UAE Securities and Commodities Authority (SCA).

  • Market Capitalization: USD 69 billion (December 2012)
  • Trading Volume: 16,391,404,462 (for 2012)

FOCUS: How active are foreign investors in your exchange? How accessible is your market?

ADX: There are no pre-investment approvals required for foreign investors prior to investing in ADX. Foreigners can invest directly in the UAE economy by holding up to 49% of the companies operating outside the free zones areas except for insurance sector in which the percentage is 49% for GCC investors and 25% for other nationalities. Those companies take the shape of public joint stock companies, private shareholding companies & limited liability companies.

Consequently, foreigners can trade on local shares based on the company articles of association which defines the allowed foreign ownership percentage up to 49% as a maximum for foreigners. ADX displays a frequent updated schedule about the percentage of allowed and actual ownership of companies traded in the market. Foreign companies listed are open 100% for foreigner trade.

  • ADX can be described, in essence, as a massive electronic system operating in accordance with the state of the art computer technologies, through which deposit, registration, trading and settlement of securities are conducted. The market members who deal directly with this system are the operators of the system, namely the, market staff, and the users of the system namely the accredited brokers who enter selling and purchasing orders received from investors. ADX provides e-services of about 70% of the total services provided at the exchange. ADX website carries a report center to access 25 different reports on a historical basis about Index performance, shares performance and ADX trading.
  • ADX has 68 listed Securities allocated as follows: 1 ETF, 1 Convertible Bond, and 66 companies which are in the following nine sectors: Banks include (14) companies, the Real Estate sector includes (4) companies, the Consumer Staples sector includes (5) companies, the Investment and Financial services sector includes (1) company, the Industrial sector includes (13) companies, the Telecommunication sector includes (3) companies, the Services sector includes (7) companies, the Energy sector includes (2) companies, and the Insurance sector includes (17) companies.
  • As of the end of 2012, ADX has 914,564 investors, 350,121 of which are foreign investors.

Abu Dhabi Securities Exchange (ADX’s) strategic plan was developed with a focus to contribute on five main aspects toward achieving the Abu Dhabi government 2030 vision.

FOCUS: What new project/product are you currently working on?

ADX: ADX is continuously scanning market opportunities to enhance and develop the exchange. Snapshots of ADX’s projects include:

  • Enhancing the local fixed income and Sukuk market.
  • Develop the platform to allow the listing and trading of:
      - REITs.
      - DRs.
      - Rights.
  • Development of the ETF market.
  • Market enablers include:
      - Brokers’ classification: clearing and non-clearing members.
      - Cross boarder trading.
  • Enhancement of country classification:
      - DVP enhancement

FOCUS: What are the challenges you see in your market today and in the future?

ADX: In our aspiration to be the exchange of choice, we have faced some challenges, but they are the same challenges that any 12 year old stock market would face. We would like to see family owned companies listed in the exchange. We would like to develop new financial products that could attract institutional investors. We are also looking forward to receiving new IPOs

FOCUS: How do you assess your exchange’s position at a time of increased globalization?

ADX: Abu Dhabi Securities Exchange (ADX’s) strategic plan was developed with a focus to contribute on five main aspects toward achieving the Abu Dhabi government 2030 vision:

  • Building a sustainable, knowledge-based economy.
  • Further developing the private sector with optimal transparent regulations.
  • Building human capital.
  • Managing the demographic mix of the Emirate.
  • Managing environmental sustainability.

Thus, alignment with the Abu Dhabi Policy Agenda and Economic Vision 2030, Abu Dhabi Securities Exchange strives to:

  • Provide support for the Government Policy Agenda and Economic Vision 2030.
  • Provide international best standards of regulation.
  • Provide world class trading facilities.
  • Provide strategic cooperation with relevant international exchanges.
  • Provide active participation by local and international institutions.
  • Become the leading market in the Gulf

Based on the government outcomes, ADX has cascaded these outcomes and built its key priorities to reflect them as part of its overall vision. Strategic initiatives and key performance indicators (KPI’s) are revised on a yearly basis to reflect the fast and evolving nature of the financial industry.