Israelis enter Dubai markets: volumes, price efficiency, liquidity

Rick Steves

Many established trading companies in Dubai expect to see new partnerships and added volumes amid the entry of Israeli entities. FinanceFeeds spoke to Gaurav Kashyap, Head of Futures at EGM Futures DMCC, a regulated subsidiary of Equiti Group, to ascertain his view on the matter.

Dubai is getting all the attention within the trading industry as executives make their final preparations ahead of the iFX EXPO, which will take place at the exclusive 5-star Grand Hyatt Hotel, Dubai from 19-20 May 2021.

With flights and hotels to book, booths to design, and pre-event networking to complete, we’re counting down to the event. If you haven’t yet registered for the iFX EXPO in Dubai, you should do so immediately here.

This will be the first live event in over a year and the first to take place following the normalization agreement between the UAE and Israel, which is expected to bring new dynamics to the markets.

The Israel Securities Authority (ISA) has recently issued a permit allowing Israeli traders to become members of the Dubai Gold & Commodities Exchange (DGCX) and trade the operator’s list of Futures and Options Contracts.

Only qualified Israeli corporations who trade on a proprietary basis are able to apply for membership at the venue and to use its trading services and platforms, as well as to act as market makers on the DGCX platform. The permit holder’s operations are not subject to the supervision of the Israel Securities Authority.

The permit issued by Israel’s financial watchdog does not constitute an opinion regarding the quality of the services rendered by the permit holder or the risks that such services entail.

The issuance was announce in early May. At the time, DGCX’s CEO Les Male said “the landmark development of the Abraham Accords provides a springboard for the Israeli community to come to Dubai and invest, opportunities for our new Israeli member base to hedge risk, and to invest in secure and safe assets during times of uncertainty.

“Our contracts have already opened a door for international traders by providing offshore access to specific regional markets, especially India, one of the world’s largest bullion-trading hubs. We look forward to opening doors for traders from Israel.”

Many established trading companies in Dubai expect to see new partnerships and added volumes amid the entry of Israeli entities. FinanceFeeds spoke to Gaurav Kashyap, Head of Futures at EGM Futures DMCC, a regulated subsidiary of Equiti Group, to ascertain his view on the matter.

“EGM Futures, a regulated subsidiary of Equiti Group, embraces new participants on the DGCX and sees it as a positive as increased volumes will result in improved price efficiency and liquidity.

“New members and their underlying clients will surely contribute to a more dynamic trading environment. The potential for the trading industry is exciting given that both hard and soft commodities are bouncing back in a very fashionable way and opening-up to new markets will only increase the demand for traded contracts.”

“Exchanges will be driven by technology in the future and DGCX’s recent landmark technology agreement with Nasdaq will position the Exchange to be well prepared to welcome new international market participants.”

The landmark agreement Mr. Kashyap refers to is for the deployment of Nasdaq’s full suite of integrated marketplace solutions on DGCX.

Delivered via the Nasdaq Financial Framework, marketplace solutions include multi-asset trading and real-time clearing capabilities, pre-trade risk management, as well as market intelligence, market surveillance, and quality assurance applications required to safeguard the integrity of the market.

Nasdaq’s real-time clearing solution will provide DGCX with high-velocity multi-asset class clearing, settlement, and risk management capabilities so that DGCX is able to offer full clearing capabilities to external marketplaces, both regionally and globally.

The normalization agreement, formally known as Abraham Accords, was reached on August 13, 2020. It marked the first public normalization of relations between an Arab country and Israel since that of Egypt in 1979 and Jordan in 1994. Bahrain and Israel then reached a similar agreement on September 15, 2020, making it the fourth state recognizing Israel.

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