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Abu Dhabi Securities Exchange adds Etisalat to the Market Maker Activity
Oct 07, 2015
Abu Dhabi Securities Exchange announced on Wednesday, October 7th, 2015 that the UAE Company, Etisalat, has joined the Market Maker Activity services first launched in Abu Dhabi Securities Exchange on February 3rd, 2015. The implementation of this activity has indicated positive results with respect to stock exchange in Abu Dhabi Securities Exchange despite the relatively short age of this experiment. The experiment was commenced by the National Bank of Abu Dhabi after it obtained the first license in April, 2014 following its success in meeting the license conditions and requirements set forth by the Securities and Commodities Authority to provide the service through Abu Dhabi Securities Exchange. Consequently, this encouraged the current market maker to engage in the experiment which is the decision of the Federal Government to allow foreigners to exchange Etisalat stock up to 20% of the institution’s capital, in addition to the study’s results that the National Bank of Abu Dhabi has carried out which motivated the concerned bodies to add Etisalat Company to the market maker services after completing the required legal procedures.

In this regard, today’s press release mentioned that although only a short period of time has passed since the launch of the step of the first market maker in the United Arab Emirates, which is considered the first of its kind in the Middle East, the experiment has so far proved successful, and has motivated many other markets in the region to request advice from Abu Dhabi Exchange Administration which has become a key reference body for other markets with respect to the market maker issue.

The Exchange explained that the positive results are clear and evident through the adjustment of balance in the movement of some stocks which were adopted into the market maker activity’s work list. These stocks are: Aldar Properties PJSC stocks, Waha Capital stocks, First Gulf Bank stocks and Abu Dhabi Commercial Bank stocks, since they are considered the first companies in this field and which were the first to join the market maker activity. This has reinforced trust in the exchange activity and encouraged investors to invest instead of speculation, not to mention the improvement in companies’ liquidity size which the National Bank of Abu Dhabi has adopted to practice its role as a market maker.

This resulted in attracting new liquidity to Abu Dhabi Securities Exchange in general regardless of its value. Also, the gap between supply and demand that exists in these companies’ order books has been bridged. Consequently, Etisalat Company was added to the market maker activity since it is one of the UAE’s pioneering companies in the field of communication services in the Middle East.

This has led to an increase in consultation activity with many companies that expressed their desire to play the role of market makers over the coming period. These companies’ quest to achieve this goal is supported by positive market morale and the organizational and legislative reforms that the competent bodies are carrying out in this regard.

As everybody knows, providing the market maker service has contributed to promoting the Exchange overseas and raised its competitiveness after its adopt of one of the services that match some of the best global practices. This comes as part of the Exchange’s strategy which aims to activate the capital market’s role in Abu Dhabi as a financing tool used for expansion and growth. The “Market Maker” represents a key part of the elements of the basic structure needed for the development of other tools in the market which would consequently contribute to the diversification of range of available products and enhance its ability to attract investments in an open environment characterized by transparency and disclosure. Moreover, the success of the “Market Maker” in playing its part in the State’s markets comes in accordance with the regulations that govern the exchange process in the market. These regulations are stated in the laws and legislations that govern the market’s work which in turn seeks disclosure and transparency in work and the pricing based on a natural interaction. All these steps come as a result of Abu Dhabi Securities Exchange’s keenness to fulfill the ambitious aspirations since the Exchange is committed to fulfill its respective role and since it represents the fundamental economic constituent in the economic development process that is part of Abu Dhabi Government’s Strategic Vision 2030. This Vision aims to ensure the implementation of the best global practices that are adopted with respect to the different aspects of the economic work.

The press release has described the results of implementing the market maker as positive in many aspects, most importantly the fact that this market maker represents the safety valve. It is committed, over the entire period of the exchange, to set forth orders with stated prices to purchase and sell one specific security or more, improve the stock’s liquidity levels and help maintain a tempting difference between the selling and purchase prices. This would lead to the creation of liquidity for specific stocks instead of all the stocks. It would also reinforce and promote the popularity of these companies among the investors community.

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