Derivative markets in the Middle East remain small by global standards. Yet the most successful products – currencies at DGCX, DME’s Oman Crude, Nasdaq Dubai’s index futures – are growing strongly. Patience will be required, as thriving derivatives markets require a virtuous circle of investor and broker participation, leading to liquidity. But, as Hugo Cox reports, this is just the beginning – in two years’ time, there should be nascent markets in Saudi Arabia, Bahrain, Qatar and Abu Dhabi.
Never has the need for a mature derivatives industry in the Middle East looked greater.
The request by Dubai World, the Gulf’s largest state-owned conglomerate, for a six month moratorium on servicing its debts on November 25 shocked world markets, tipping the FTSE 100 into its largest single day loss since March.
As investors exposed to the region scrambled to hedge themselves against further...