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The total value of margin trading in Abu Dhabi Securities Exchange (ADX) has reached AED10.5 billion during the first nine months of 2016.
The value of margin trading, according to Rashed Al Blooshi, Chief Executive of ADX, has represented 15.5 percent of total trade deals in the market that equalled AED68 billion.
Real estate companies took the lion’s share of margin trading facilities provided by brokers, equalling 66 percent. The Al-Sharq real estate was the most active company with AED3.33 billion in deals, followed by Al-Dar with AED1.7 billion and Manazel with AED978 million. Meanwhile, margin trade deals on First Gulf Bank shares reached AED734 million.
"Margin of trade services has improved significantly during the past few years and contributed to the increase in liquidity," Al Blooshi said.
"The ADX has the authority to grant licences for this product which helped the financing of a large section of traders. And after upgrading the ADX to become an emerging market by Morgan Stanley, this service has enabled brokers to increase their income and improve their competitiveness as well as becoming a point of attraction for local and foreign investors alike," he added.
The constant growth in margin trading is parallel to the increase in number of brokers in ADX, which reached 47. The total number is expected to increase in the near future, according to Al Blooshi.
The margin trading rules of procedures was issued in 2008 and allowed brokers to finance a percentage of their clients’ investments – against certain guarantees. It stipulates that the broker has the technical and financial abilities for practicing margin trades. Additionally, brokers must have the financial solvency prior to applying for a licence.?
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