ADX margin trading reaches Dh10.5b in nine months

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The total value of margin trading in Abu Dhabi Securities Exchange (ADX) has reached Dh10.5 billion during the first nine months of 2016.

The value of margin trading, according to Rashed Al Blooshi, Chief Executive of ADX, has represented 15.5% of total trade deals in the market that equalled Dh68 billion.

Real estate companies took the lion’s share of margin trading facilities provided by brokers, equalling 66%. The Al-Sharq real estate was the most active company with Dh3.33 billion in deals, followed by Al-Dar with Dh1.7 billion and Manazel with Dh978 million. Meanwhile, margin trade deals on First Gulf Bank shares reached Dh734 million.

“Margin of trade services has improved significantly during the past few years and contributed to the increase in liquidity,” Al Blooshi said.

Growing competition

“The ADX has the authority to grant licences for this product which helped the financing of a large section of traders. And after upgrading the ADX to become an emerging market by Morgan Stanley, this service has enabled brokers to increase their income and improve their competitiveness as well as becoming a point of attraction for local and foreign investors alike,” he added.

The constant growth in margin trading is parallel to the increase in many brokers in ADX, which reached 47. The total number is expected to grow shortly, according to Al Blooshi.

The margin trading rules of procedures were issued in 2008 and allowed brokers to finance a percentage of their clients’ investments – against certain guarantees. It stipulates that the broker has the technical and financial abilities for practising margin trades. Additionally, brokers must have the financial solvency before applying for a licence.

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