Nasdaq Dubai welcomes EU recognition of its central counterparty framework

• Ruling opens door to international banks and investors playing key role in fast-growing equity futures market

  Nasdaq Dubai has welcomed a ruling by the European Union that grants recognition to the exchange’s clearing infrastructure. The decision opens the door for overseas banks and investors to play a larger role in Nasdaq Dubai’s rapidly growing equity futures market.

  The ruling by the European Securities and Markets Authority (ESMA) recognises Nasdaq Dubai as a third-country central counterparty (CCP) under EU regulations. This enables banks based in the EU to apply to become Clearing Members on the exchange.

  Hamed Ali, Chief Executive of Nasdaq Dubai, said: “Building on our existing international connectivity, this recognition by ESMA further enhances our links with European market participants. We are in discussions with a number of European banks that wish to become General Clearing Members (GCMs) on our equity futures market. Acquiring overseas Clearing Members will facilitate more trading by investors based around the world, adding new impetus to the market, which is currently dominated by regional investors.”

  Nasdaq Dubai’s equity futures market has traded more than 1 million contracts since it opened on September 1, 2016 and open interest stood at a record high at the end of March 2017. The market comprises futures on prominent UAE-listed companies and all its current market makers and Members are regionally based entities.

Clearing Members include Individual Clearing Members (ICMs) who can clear their own and their clients’ trades, and GCMs who can do the same and also clear on behalf of other Members. 

ESMA’s ruling also applies to Nasdaq Dubai’s CCP infrastructure regarding equities and other securities.  The UAE is the only country in the Middle East to which the ruling applies. 

The ruling follows ESMA’s decision in January 2017 to classify the framework for central counterparties of Dubai Financial Services Authority (DFSA), Nasdaq Dubai’s regulator, as equivalent to that of the European Union.