Margin trading finances $4 bln on Abu Dhabi Securities Exchange

PHOTO

ABU DHABI, 5th February, 2017 (WAM) -- Abu Dhabi Securities Exchange (ADX) announced that margin trading financing reached AED15.2 billion in 2016, representing 15.4 percent of the total trading value (buy and sell), which amounted to AED98 billion.

The increase in the value of this trading is due to the increased number of brokerage companies that offer this service reaching 33 out of 48 brokerage firms that operate in the Exchange ADX said in a press release on Sunday.

The total shares that were financed by this service reached AED15.5 billion, indicating that the majority of liquidity was offered to small shares.

Real estate companies trading on ADX topped the list with AED10.7 billion, or 70.3 percent of all funding offered by brokerage companies in 2016.

Eshraq Properties was the most active among these companies, with AED6.24 billion, followed by Al-Dar with AED1.94 billion, Manazel with AED1.43 billion, and RAK Properties with AED1.1 billion.

In the banking sector, First Gulf Bank shares received AED962 million in funding, followed by National Bank of Abu Dhabi with AED328 million. In other sectors, Dana Gas received AED516 million, Methaq Takaful Insurance at AED563 million, while Etisalat received AED353 million of margin trading financing.

"The growth of margin trading financing to 11 percent in 2016 shows that the service is improving constantly, increasing the value of trading liquidity. Margin trading financing has become a new source of income for many brokerage companies recently, as it is a channel for financing, instead of borrowing, for many investors," said Rashed Al Blooshi, Chief Executive of ADX.

"It is not only the local investor who is benefiting from the margin trading service, but also foreign investors whether they are institutional or individuals. This indicates that the product has expanded trades on the Exchange. ADX is always interested in diversifying its products to increase its competitiveness," he added.

The law regulating margin trading was issued in 2008, and enables brokerage companies to finance a percentage of their clients investments against their shares or other guarantees.