NASDAQ DUBAI. Single Stock Futures LAUNCH PARTNERS

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1 NASDAQ DUBAI Single Stock Futures LAUNCH PARTNERS

2 2 As a leader in innovation, Nasdaq Dubai s equity futures market provides investors with attractive opportunities.

3 Equity Futures: An Exciting New Market Nasdaq Dubai s equity futures market is opening on September 1st It enables trading of Single Stock Futures on the shares of some of the UAE s leading and most liquid companies. This provides a unique opportunity to international and regional investors to profit from market movements and hedge their positions. The market is the outcome of collaboration between Nasdaq Dubai and leading capital markets participants including SHUAA Capital, which is providing market making services, and Arqaam Capital, EFG Hermes, Integrated Securities, Mena Corp Financial Services and Mubasher Financial Services as brokers. In due course Nasdaq Dubai s market will expand to include other derivatives products, including futures on shares listed on MENA and international markets as well as options. Equity futures are a commitment by two parties to buy or sell a specific equity at a future date (eg one month s time) at an agreed price. Nasdaq Dubai Single Stock Futures are settled through cash, instead of physical delivery of the underlying equity. Each equity futures contract gives exposure to 100 underlying shares. Settlement of price differences takes place in cash. POTENTIAL Share price movements create significant opportunities for investors in futures, whether share prices rise or fall. 8 EMAAR Properties 7 6 Price (AED) M Volume 20M Jun-2015 Jul-2015 Aug-2015 Sep-2015 Oct-2015 Nov-2015 Dec-2015 Jan-2016 Feb-2016 Mar-2016 Apr-2016 May

4 Products Nasdaq Dubai s Single Stock Futures market is opening with contracts on 10 UAE companies Underlying Shares Contract Symbol Contract Size (shares per contract) Currency Contract Expiry Aldar Properties ALDAR 100 AED 1, 2 and 3 months Arabtec Holding ARTC 100 AED 1, 2 and 3 months DP World DPW 100 USD 1, 2 and 3 months Dubai Islamic Bank DIB 100 AED 1, 2 and 3 months Dubai Parks and Resorts DBPARK 100 AED 1, 2 and 3 months Emaar Properties EMAAR 100 AED 1, 2 and 3 months Emirates Telecommunications Group (Etisalat) ETISLT 100 AED 1, 2 and 3 months * List of companies are subject to change LAUNCH PARTNERS Market Maker Brokers System Vendors 4

5 Contract Specifications Trading Platform Currency X-Stream trading platform AED or USD, same as underlying stocks traded on UAE stock markets Contract Size 100 Maturity Settlement Type Margin Expiration Day Settlement Day Settlement price on Expiration Day Trading Hours Trading Days Listing of new Contract Month Trading safeguards (price limits) 1 Month, 2 Months and 3 Months. 3-Month contracts will be created each month on 2nd Thursday. Cash Settled Ranges from 10%-30% of notional value 3rd Thursday of each Month Business Day following Expiration Day Volume weighted average closing price of underlying equity using last 30 minutes 10:00 to 14:00 Hours (please refer to trading manual for detailed trading phases) Sunday to Thursday Thursday prior to maturity 15% up and 10% down from previous closing price 5

6 Benefits of Equity Futures Nasdaq Dubai Single Stock Futures offer many benefits for investors. LEVERAGE Leverage is a key feature of equity futures. The initial payment (called initial margin) that an investor must make is only between 10% and 30% of the value of the contract. This magnification of the effect of the capital, called leverage, can lead to significant gains (or losses). These gains (or losses) can be much larger than the amount invested. PROFIT WHEN PRICE FALLS AS WELL AS RISES Selling in advance (shorting) and buying back allows an investor to profit from a stock that is going down in price. Buying and then selling later allows an investor to profit from a stock that is going up. TRADING AND ARBITRAGE Investors can benefit from the out-performance of one stock price over another through pair trading, by going long on one stock and short on another stock through futures. There are also opportunities for arbitrage when futures and underlying stock prices diverge. HEDGING Allows portfolio managers and investors to hedge their existing market exposure, either increasing or decreasing their exposure to volatility of the underlying equity. COST EFFECTIVE Futures fees can be lower than fees for trading equities. STANDARDISATION Futures contracts are always in a standardised form. 6

7 Central Counterparty Clearing Unlike over the counter (OTC) transactions, onexchange futures trading is regulated and offers better price transparency on standardised contracts. Nasdaq Dubai s equity futures will be cleared through its central counterparty (CCP) clearing infrastructure. Nasdaq Dubai will act as a buyer to every seller and seller to every buyer. This helps Clearing participants to limit credit risk and achieve operational and financial efficiency. KEY BENEFITS OF A CENTRALLY CLEARED ENVIRONMENT: Transparent pricing Standard and neutral risk management standards Daily mark to market and initial margining to mitigate market risk exposure Regulated infrastructure How To Trade An investor opens an account for futures trading with an approved Nasdaq Dubai broker. They can then place orders in the same way as for stock trades. The initial payment for the futures is the initial margin. Profit and losses will be settled on a daily basis (known as variation margin). Investors must keep sufficient cash balance with their broker to meet their initial margin and daily variation margin requirement. If an investor fails to meet their margin requirement within the time specified by the broker, the broker may close the investor s positions. 7

8 Why UAE Equity Futures? Nasdaq Dubai is the only exchange where futures on UAE equities can be traded. UAE share markets are highly liquid, creating dynamic trading patterns (DFM volatility is 49%) 2014 upgrade of UAE to MSCI Emerging Markets Index has increased inward fund flows by an estimated USD 1.2 billion UAE GDP is 2 nd largest in MENA, with IMF expecting 2.6% growth in 2016 The shares underlying Nasdaq Dubai futures account for 55% of traded value of all UAE listed companies in USD Billions Total Traded Value (UAE Equity markets) Feb-2015 Apr-2015 Jun-2015 Aug-2015 Oct-2015 Dec-2015 Feb-2016 Apr ,000 UAE Market Indices 5,000 ADX General Index DFM General Index 4,000 3,000 2,000 1,000 Jan-2011 Sep-2011 May-2012 Jan-2013 Sep-2013 May-2014 Jan-2015 Sep-2015 May

9 FAQ Can an investor buy or sell a futures contract before expiry? As long as there is a buyer or seller, futures can be exited at any time. There is no requirement to keep the futures till expiry. What currencies are Nasdaq Dubai Single Stock Futures traded in? The currency will be of the underlying share. In practice, this means AED for all of them except DP World which is USD. What are the trading hours? 10:00 am 2:00 pm, Sunday - Thursday. Can non-uae nationals trade? Yes. All nationalities are welcome. Is short selling allowed? Yes. Selling in advance (shorting) and buying back allows an investor to profit from a stock that is going down in price. Do I get cash dividends by holding futures contracts? Investors should note that long position holders in futures contracts will not be entitled to any ordinary cash dividend paid on underlying shares. The price of the futures contract will discount any expected upcoming dividend. Investors will have to consider the possibility of dividend uncertainty while trading. What is the role of a market maker? A market maker provides liquidity to the market. Market makers are financial institutions that simultaneously offer both Bid and Ask prices for the same contracts. What happens on the expiry date of the future? On expiry date the futures will be calculated based on the stock closing price (weighted average of last 30 minutes of trading). Any profit or loss will be calculated based on this price and settled accordingly. All open futures will expire on this date and variation margins will be called or paid and initial margins will be returned. Investors can roll forward to the next contract period if they wish to keep the position open. What are the risks involved in trading futures? Trading in futures carries risks for investors. It is recommended that investors seek advice before trading if they have limited experience. Leverage Magnification of the effect of the capital can lead to significant losses, considerably more than the movement of the underlying asset. Close out Futures contracts may be closed out on or before expiry date. Any open contracts are automatically closed on expiration day. Margin calls Your broker may make exposure-based margin calls during the term of the future, which require immediate cash settlement. Any failure to meet this margin call may result in liquidation of your positions with or without your consent. Dividend uncertainity Holders of futures contracts do not receive any ordinary dividends paid by the company on underlying shares. Investors must also consider that expected dividends declared and factored into futures prices are not certain and this may affect the profit or loss made by investors on their futures trading. 9

10 About Nasdaq Dubai Nasdaq Dubai is the international financial exchange in the Middle East. It combines international best practice with easy access by investors in the region and around the world. The exchange s tradable securities include equities, Sukuk and conventional bonds, funds, and REITs USD B I L L I O N Total capital raised with aggregate demand exceeding USD 140 billion, since 2006 Best Exchange of the Year Middle East award 2014 from the Global Investor Global exchange brand in the heart of the Middle East Largest IPO in the region at the time with DP World 4.96 USD B I L L I O N 97.0 USD B I L L I O N Combined market capitalisation of 80 listings Leading global exchange for Sukuk by value 10

11 Disclaimer Nasdaq Dubai Limited (Nasdaq Dubai) is regulated by the DFSA. The information provided in this document ( Information ) is provided by way of general information and comment only. While reasonable care has been taken in producing this Information, changes in circumstances may occur at any time and may impact on the accuracy of the Information. The Information does not constitute professional advice or provision of any kind of services and should not be relied upon as such. Nasdaq Dubai Limited and/or its affiliates, officers or employees (together Nasdaq Dubai ) do not give any warranty or representation as to the accuracy, reliability, timeliness or completeness of the Information now or in the future. Nasdaq Dubai shall not be liable for any loss suffered, directly or indirectly by any person acting in reliance upon the Information contained herein. No part of the Information provided is to be construed as a solicitation to make any financial investment. Information, including forecast financial information and examples should not be considered as a recommendation in relation to holding, purchasing or selling securities or other instruments. The information does not take into account any investor s individual investment objectives, financial position and particular investment needs. As such, before making any decision, investors should conduct their own due diligence and consult their financial advisors. The performance of trading securities or instruments is not guaranteed and past performance is not an indication of future performance. Unless otherwise stated, Nasdaq Dubai Limited owns copyright in the Information contained herein. The Information may not otherwise be reproduced and must not be distributed or transmitted to any other person or used in any way without the express approval of Nasdaq Dubai Nasdaq Dubai Limited 11

12 Nasdaq Dubai Equity Futures Nasdaq Dubai General Enquiries business@nasdaqdubai.com Nasdaq Dubai Limited, Dubai International Financial Centre, The Exchange Building 5, Level 7 PO Box 53536, Dubai, United Arab Emirates nasdaqdubai.com/futures /nasdaqdubai /company/nasdaq-dubai