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Wed 22 Oct 2008 11:17 PM

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Dubai's DIFX to list futures based on share index

Contracts also to launch on certain stocks on Dubai and Abu Dhabi markets.

Dubai International Financial Exchange (DIFX) said on Wednesday it would launch a futures contract based on its main share index, the latest in a series of steps to help boost liquidity on the market.The new futures contract, to be introduced in November, will be based on FTSE DIFX UAE 20 index.

The DIFX will also launch futures contracts based on the individual shares of DIFX-listed Dubai Ports World, 12 stocks listed on the Dubai Financial Market and seven stocks listed on the Abu Dhabi Securities Exchange.

"The derivatives market could enhance liquidity in the local market," Chief Executive Jeffrey Singer told a media briefing. "We want to give local investors more choice as part of our international campaign."

DIFX has announced a slew of reforms such as allowing companies to list in dirhams as well as in dollars. It has already announced plans to extend trading hours as well as allowing trading to include Sundays, in line with regional practice.

The exchange, largely-dominated by institutional investors, is seeking to beef up its retail investor base, a characteristic of the two other exchanges in the United Arab Emirates.

DIFX also aims to attract more secondary listings to mitigate a slowdown in primary listings as a global credit crunch is slimming the opportunities for initial public offerings.

Dubai set up the DIFX in 2005 to encourage local companies to sell shares to the public, and for foreign companies to tap wealth in the UAE, the world's fifth-largest oil exporter and a regional financial hub.

DIFX is the only exchange in the Gulf Arab region to allow OTC or over-the-counter trading, in which the parties involved in the transaction are obliged to inform the exchange only after the closing of the deal, Singer said.

About half of the volume traded on the DIFX is OTC trading, which creates liquidity on the exchange, Singer added. (Reuters)

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