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Dubai exchange explores options as Indians stop licensing securities abroad

DGCX said on Monday it was working with Indian counterparts to explore alternatives after India's three main stock markets announced they would stop licensing their indexes and securities abroad.

February 12, 2018 / 07:31 PM IST
Investors monitor screens displaying stock information at the Abu Dhabi Securities Exchange June 25, 2014. The spectacular rise and fall of Arabtec, Dubai's most heavily traded stock, teaches hard lessons about how risky the region remains for investors even as its rapid economic growth lures billions of dollars in fresh funds from abroad. Wild trading by local retail investors who dominate activity, plus weak corporate disclosure and a hands-off approach by regulators, can make a toxic mix, and on occasion destabilise entire markets.  REUTERS/Stringer(UNITED ARAB EMIRATES - Tags: BUSINESS) - GM1EA6P1SB601

Investors monitor screens displaying stock information at the Abu Dhabi Securities Exchange June 25, 2014. The spectacular rise and fall of Arabtec, Dubai's most heavily traded stock, teaches hard lessons about how risky the region remains for investors even as its rapid economic growth lures billions of dollars in fresh funds from abroad. Wild trading by local retail investors who dominate activity, plus weak corporate disclosure and a hands-off approach by regulators, can make a toxic mix, and on occasion destabilise entire markets. REUTERS/Stringer(UNITED ARAB EMIRATES - Tags: BUSINESS) - GM1EA6P1SB601

The Dubai Gold and Commodities Exchange (DGCX) said on Monday it was working with Indian counterparts to explore alternatives after India's three main stock markets announced they would stop licensing their indexes and securities abroad.

India's decision appears to threaten several products offered by the DGCX, which trades futures based on the Bombay Stock Exchange's Sensex index; futures based on single Indian stocks; and Indian rupee and U.S. dollar-based futures for an Indian index compiled using methodology from MSCI.

"DGCX is working very closely with the Bombay Stock Exchange (BSE) as well as India International Exchange (INX) to explore alternative offerings, which will be communicated in due course," it said.

The BSE, the National Stock Exchange and the Metropolitan Stock Exchange said on Friday that they would terminate their foreign licensing agreements with immediate effect, subject to notice periods, because they wanted to prevent trading in Indian assets from migrating outside the country.

The DGCX said trade in its equity-related contracts was continuing for now, but did not elaborate on what arrangements might be made if notice periods expired.

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The United Arab Emirates and the Gulf have large populations of Indian expatriates, and India-related contracts have been a major reason for growth in the DGCX's business over recent months.

The exchange reported earlier that last month was its best January ever for trading volumes and value, with volume across its business surging 40 percent from a year earlier to 1.91 million lots valued at $47 billion. The main drivers of the growth were the Indian rupee, other currency pairs, Indian single stock futures and Sensex futures, it said.

Last November, the DGCX said it was adding 44 blue-chip Indian companies to its range of single stock futures. Between July and October, it traded 851,108 of the contracts, up ten-fold from 2016, with a value of $5.4 billion, it said.
Reuters
first published: Feb 12, 2018 07:30 pm

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