By Andrew Sambidge
Emirate’s bourse to open platform that will allow for trading in Islamic and conventional bonds
NASDAQ Dubai, one of the emirate’s two financial markets, is to open a platform that will allow investors to trade both Islamic and conventional bonds.
In a statement the exchange said that tradable securities will initially comprise at least 12 sukuk, or Islamic bonds, and conventional bonds that are listed on the bourse, with a nominal value of $10.9bn.
The platform will be available to high-net worth and institutional investors, and will be opened gradually over the coming weeks, NASDAQ Dubai said. Trades will be automatically be routed for settlement at Euroclear Bank.
"The new platform is a natural extension of Dubai's existing role as a centre for sukuk and bond issuance and listing,” said Essa Kazim, chairman of Borse Dubai, holding company for Dubai’s stock markets.
“NASDAQ Dubai will offer an efficient trading venue to participants from the region and around the world, providing fresh impetus to the growth of the capital markets in the UAE and the region," Kazim added.
Prices for NASDAQ Dubai-listed sukuk and bonds will be visible to traders simultaneously on a screen-based system through the exchange, which the bourse says will boost transparency and efficiency in the secondary market and promote liquidity.
At present, bonds and sukuk are only tradable through lenders offering investors different trading structures and prices, known as ‘over-the-counter’ trading.
In March this year acting NASDAQ Dubai CEO Hamed Ali told Arabian Business that the exchange will “easily” become the world’s largest sukuk market by next year.
Billions of dollars worth of sukuk are expected to be listed on the NASDAQ this year and in 2014, helping to propel it from being the third largest sukuk market globally to the first.
“If we consider the activities expected in the market this year and next year we can easily become number one within the coming one to two years,” Ali said.
“Our plan is very strong for this year and potentially next year, it keeps on growing. If we end up attracting between 20 to 30 percent of that we’re easily number one.”
Prime Minister and Ruler of Dubai Sheikh Mohammed bin Rashid announced in February the emirate’s intention to become the leader in sukuk.
NASDAQ Dubai will need to issue nearly $20bn worth of sukuk – twice as much as it presently has - in order to take over London as the largest market for the bonds.For all the latest market news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.