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International Financial Exchange in Dubai (DIFX)

The Dubai International Financial Exchange (DIFX) opened for trading for the first time on September 26, 2005.
The launch of the first truly international stock exchange located between Western Europe and East Asia took place at a ceremony at the Dubai International Financial Centre (DIFC), where the DIFX is located.

The stated aim of the DIFX was to become the leading exchange in its region for equities, bonds, funds, Islamic products and other securities, and a gateway for international and regional investment.

It is the first exchange in the region that has been created to list securities from many different countries. UAE companies are able to list shares on the DIFX by setting up a holding company in the DIFC. Companies seeking listings on the exchange must have a minimum market capitalisation of $50 million.

The exchange is additionally regulated in such a way as to allow companies which list on it to determine the portion of shares that they want to offer to the investing public. This flexibility is designed to encourage family-owned businesses and government entities discouraged by the current UAE lower listing limit of 55% to list on the bourse.

The DIFX market opened with the listing of five Deutsche Bank securities. These are index tracking certificates, which cover the US S&P 500, the German DAX 30, the Japanese Nikkei 225, the EuroStoxx 50 and the Stoxx 50.

The DIFX opened with four member banks – CSFB ( Europe) Ltd, Deutsche Bank AG, HSBC Bank plc and UBS AG. In 2007, it had 19 member brokers, including leading international and regional banks.

In August 2007, the Dubai Government announced the consolidation of its holdings in the Dubai Financial Market (DFM) and Dubai International Financial Exchange (DIFX) into a new holding company, Bourse Dubai.

The government stated at the time that the move was in line with the Dubai Strategic Plan 2015, and demonstrated its commitment to position Dubai as the leading capital market in the region.

DIFX and DFM continue to be regulated by the Dubai Financial Services Authority (DFSA) and the Emirates Securities and Commodities Authority (ESCA) respectively.

Explaining the role of Borse Dubai within the new structure, DFM Chairman Essa Kazim, who was appointed as the Chairman of Borse Dubai, said that the company is intended to be a facilitator, allowing DIFX and DFM to explore joint opportunities for the development of capital markets in the region and in the broader context of global exchanges.

The DIFX has ambitions to become the exchange of choice for the listing of Islamic finance instruments, and took major steps towards this goal with the listing of over 100 Sukuks, or Islamic bonds, in 2007. In fact, as 2007 drew to a close, the DIFX was already the largest exchange in the world for Sukuk by listed value, at $13.78 billion.

In October 2007, the DIFX announced that it was preparing to list a range of Islamic structured products that will offer investors new Shariah-compliant opportunities on a new platform known as TraX. Created by the DIFX in August 2007, TraX is the only structured products platform in the region, and major banking institutions including Citigroup, Deutsche Bank, Merrill Lynch and Morgan Stanley plan to list conventional and Islamic products on the platform.

In December 2007, Dubai's Jebel Ali Free Zone listed a AED7.5 billion ($2.04 billion) Islamic bond, or Sukuk, on the DIFX, confirming the exchange’s status as the largest in the world for Islamic bonds.

The DIFX is also a significant draw for the listing of conventional bonds, and in February 2007 Dubai Holding Commercial Operations Group (DHCOG) listed bonds worth USD2.46 billion on the exchange, in the largest corporate bond issue in the Middle East under a European Medium Term Notes (EMTN) programme.

In March 2008, the DIFX announced the composition of its new Board of Directors following the closure of a deal between the DIFX, Borse Dubai Ltd and the Nasdaq Stock Market Inc, which resulted in the NASDAQ OMX Group, Inc. acquiring a 33.3% stake in the DIFX. The two new DIFX Board members were Robert Greifeld, Chief Executive Officer of NASDAQ OMX Group and Adena T. Friedman, Executive Vice President, Corporate Strategy of NASDAQ OMX Group. The rest of the DIFX Board membership remained unchanged and comprised: Soud Ba’alawy (Chairman), Per E. Larsson (Chief Executive Officer), Maha Al-Ghunaim, Bisher Barazi, Mohamed Binbrek, Essa Kazim, Gerald Lawless, George Möller and Shadi Sanbar. Larsson has since vacated his post to be replaced by former NASDAQ executive Jeffrey Singer.

The year 2008 also saw the first dual listing take place on the DIFX, that of Netsol Technologies Inc, a California-based IT company with extensive interests in the Middle East, which is also listed on the US NASDAQ exchange. Furthermore, 2008 also saw the first Chinese company, (China Security and Surveillance Technology, Inc.) list its shares on the DIFX.





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