On January 15th, 2016 the Dubai Gold & Commodities Exchange (DGCX) introduced a new financial futures product for the local, regional and global investors under its equities asset class vertical. The product is called 'Global Single Stock Futures' which essentially mirrors the underlying prices of selected stocks from USA and India. Traders/investors can replicate Single Stock Futures for their usual stock trading strategies with the additional benefit of inbuilt leverage.
In the first phase, DGCX has launched 15 single stock futures on 5 US and 10 Indian companies.
The US companies include Apple, Facebook, Microsoft, Google & J P Morgan.
The Indian companies include blue chip stocks such as TCS, Reliance, HDFC Bank, Infosys, Tata motors etc.
Based on market acceptance and demand for these products, DGCX plans to expand the list of companies covered. This will be driven by the demand and feedback from our market participants and investors.
4 reasons to trade DGCX Single Stock Futures (SSF)
Risk Management: Dubai Commodities Clearing Corporation (DCCC), a subsidiary of DGCX provides a safe and regulated platform to hedge your risk against global market volatility particularly, in asset classes such as equities. DCCC is governed by the UAE federal regulator (SCA), thereby providing additional security compared to trading international stocks overseas.
Easy and Global Access: Currently, for a UAE resident to access US stocks, one has to open an account with a broker in the respective country and send monies to their trading account outside UAE. The cost of accessing foreign markets and trading products is often high and comes with a barrier to entry for retail investors. With the introduction of DGCX SSFs, local and regional investors can trade the most popular international stocks within the GCC region with added benefits: (i) not having to remit money abroad, (ii) costs and hassle of managing funds abroad and (iii) being exposed to exchange rate fluctuations.
Market Participation: Single Stock futures now provides a new way of participating in the growth and price performance of global blue chip companies. Local and regional traders/investors are able to participate in the price performance of Apple, Google, Facebook, Microsoft, Infosys, Reliance, State Bank of India, Tata Motors and more; sitting right here in the Middle East.
Regionally Relevant: In the MENA region, equities are the preferred and most traded instruments. The launch of the DGCX SSFs aims for increased participation from the local and regional equity trading community.
Characteristics of the DGCX Single Stocks Futures Contract
DGCX Single Stock future contracts are designed as Quanto style mini size futures which mirror the prices of the underlying stock in US Dollar terms.
Each SSF has a notional value between US$ 1000 and US$ 10,000 in order to encourage retail participation.
Each SSF is assigned a multiplier based on its stock price that determines its notional value. For instance, if the price of an underlying stock in local currency is 75, then the multiplier is set as 100, implying the notional value of US$ 7500.
Settlement of SSF will be done in cash in US$, based on the closing price of the underlying stock in its primary market on the Expiration day.
SSF Contracts are available for trading during DGCX business hours ( 07:00 am - 11:30 pm UAE Time).