Abu Dhabi's ADX says it will use the technology to expand into new asset classes

Abu Dhabi’s ADX says it will use the technology to expand into new asset classes

The Abu Dhabi Securities Exchange has gone live on a trading engine provided by US exchange group Nasdaq OMX. The upgrade project provides the Middle Eastern exchange a trading platform that will allow it to trade new asset classes and further its rivalry against Dubai and other regional exchanges.

Nasdaq’s X-stream trading engine is relatively well-known in the Middle East, having already been installed in Saudi Arabia and Bahrain, as well as further afield in Bangladesh and even New Zealand. The Abu Dhabi exchange itself chose the platform because it wanted to add support for new asset classes – in particular, fixed income and ETFs. Fixed income is popular in the Arab world as an alternative to equity investing, while ETFs have grown rapidly around the world over the last five years. As of January 2014, there were over 1,500 ETFs traded in the US alone, with over $1.7 trillion in assets.

Abu Dhabi is perpetually locked in struggle with rival Dubai for prominence in the UAE and wider Persian Gulf region. The technology platform is also important for ADX because it supports low-latency pre-trade risk management checks, which are seen as vital for ensuring market stability. Its capacity to support faster back office reconciliation of transactions and to handle an unlimited number of indices were also cited by the exchange.

“This is a proud moment for us,” said Rashed Al Baloushi, chief executive at ADX. “This is not just about the adoption of world class technology – it is about the aspirations of ADX to be a world class window for investors into the opportunities that Abu Dhabi offers. Making X-Stream available for our investors, brokers and other stakeholders takes us to a completely new operational level and prepares the way for the next stage of our development.”

Founded in 2000, ADX has 67 listed securities and a total market capitalisation of $122 billion. Banks active as custodians at the exchange include the National Bank of Abu Dhabi, HSBC, Standard Chartered, Deutsche Bank and Citi. ADX has said that it will continue to use its existing set of market surveillance and central security depository technologies, which are already provided by Nasdaq OMX.