DFM enables DGCX brokerage firms to provide derivatives trading

Dubai Financial Market (DFM) on Monday announced that it has obtained the approval of the Securities and Commodities Authority (SCA) to allow the Dubai Gold and Commodities Exchange (DGCX) licensed brokerage firms to become DFM derivatives members and to provide their services in the market for the first time.

Currently, there are approximately 21 DGCX brokers licensed by SCA and this significant step caters to the growing demand from these companies to access the DFM. The market has received a number of inquiries or interests, which are under study in order to finalise licensing.

Hamed Ali, CEO of DFM and Nasdaq Dubai welcomed SCA’s Chairman Decision No. (15/R.M) of 2022, pertaining to rules of DGCX brokerage firms seeking a DFM derivatives membership, as an example of SCA’s continuous cooperation, which facilitated the accomplishment of this unprecedented step that enables DGCX members direct and seamless access to the DFM, hence offering new trading opportunities to their clients.

According to the SCA’s decision, DGCX’s brokerage companies can acquire a range of DFM derivatives membership licenses, including: trading brokerage, trading and clearing brokerage or trading and general clearing brokerage, in line with their DGCX license.

“Dubai enjoys a comprehensive ecosystem of financial and commodities markets, and we are committed to further strengthen its integration by streamlining market participants’ access to DFM’s numerous opportunities and reinforce its status as one of the leading regional markets providing multiple asset classes such as; equities, ETFs, equities’ futures, crude oil futures, etc. to meet the growing demand from DFM’s diversified base of local and international investors,” Hamed Ali said.

“For instance, the DFM recently launched trading of Oman crude oil futures contracts in collaboration with the Dubai Mercantile Exchange and is rapidly expanding its futures’ market. Furthermore, we are planning to grow this market segment further by introducing new products on other asset classes,” Hamed Ali added.

Meanwhile, Wael Makarem, Senior Market Strategist MENA at Exness, said that the GCC stock markets traded mostly to the downside as investors continue to secure their gains. Lower energy prices are also weighing on performances in the region, making it difficult for markets to rebound.

“Oil prices declined after data revealed a lower industrial activity in China. This has altered expectations among traders pushing oil demand forecasts lower. Crude prices could continue to record losses if economic activity declines further.”

The Dubai stock market was volatile today as investors reacted to the mixed company earnings released today. These figures contrast with those that helped push the market higher earlier and could direct it toward new price corrections.

The Abu Dhabi stock market saw its main index decline, following the retreat in oil prices and the downward trend in demand expectations. The market could extend losses if energy prices continue to fall.

The Qatari stock market was declining today under the weight of the negative performance in natural gas markets. The market could see downward pressures from the slowing global economy.

The Saudi stock market declined while investors moved to secure their gains. At the same time, higher-than-expected inflation figures weigh on traders’ expectations.

The Egyptian stock market continued to see some price corrections after the large upside rally at the beginning of the month. The market could trade sideways until the Egyptian central bank’s next meeting this week.

 Most emerging market shares fell on Monday and currencies snapped a four-day rally, as weak economic data from China deepened worries about the world’s second-largest economy.

With factory and retail activity squeezed by Beijing’s zero-COVID policy and a property crisis, the economy unexpectedly slowing in July, data showed, prompting a rate cut by the country’s central bank to stimulate demand.

The Chinese yuan dropped 0.3% against the dollar. Chinese blue-chips slipped 0.1% and Hong Kong shares fell 0.6%, pushing a China-heavy emerging market stocks index down 0.3%.

The broader index had ended last week up 1.4% in its fourth straight week of gains.

“The (Chinese central bank) policy impact will depend on whether the government is able to mitigate the uncertainty associated with zero-COVID policy and Omicron outlook, whether prompt actions can be taken to address the housing market weakness, and an anticipated fiscal funding gap into 4Q,” said analysts at JPMorgan.

ING analysts note that with U.S. activity strengthening into the third quarter, the dollar should stay supported, implying more pain for emerging market currencies.

“We think the dollar does not start to turn lower until 1Q23.”