DIFX Launches Structured Products Platform

by Carla Johnson, Investors Offshore.com

29 August 2007

Deutsche Bank, Merrill Lynch and Morgan Stanley on Tuesday listed 14 structured products on the Dubai International Financial Exchange's (DIFX) new TraX platform, the first structured products platform to be created by an exchange in the Gulf Co-operation Council region.

The 14 new products listed include securities that give exposure to shares listed on the Dubai Financial Market (DFM) and the Abu Dhabi Securities Market (ADSM), as well as securities linked to commodities such as oil and sugar. Citibank and several other unnamed international banks are awaiting regulatory approval to list their products, according to the Khaleej Times.

"DIFX TraX fills a glaring gap in the capital markets, offering for the first time structured products that are based on regional assets and are listed in the region," DIFX executive Hamed Ali told the regional media.

"The DIFX aims to build TraX into a major platform, serving its region with a wide variety of structured products in the same way that other international financial exchanges serve their regions," he added.

Executives of Deutsche Bank, Merrill Lynch and Morgan Stanley, in addition to three regional brokers, EFG-Hermes, Mashreq and Mubasher, participated in a conference to launch the new platform.

Mohammad Jamal, sales and marketing manager of Direct Broker for Financial Services, which is part of Mubasher reportedly explained that: "It is easy for investors to trade structured products on the DIFX, including through online trading. It can be done just like trading shares. I believe structured products have a significant role to play in the portfolio of many regional investors."

Seif Fikry, head of brokerage for the United Arab Emirates at EFG-Hermes added: "It is exciting to see the DIFX taking bold steps with the various products being listed today, many of which we anticipate appealing to individual investors."

Merrill Lynch announced on Monday that its two new certificates (Tracker-10YIT-Dubai and ReverseT-1YRC-Dubai) on the DIFX TraX will be linked to the Dubai Investable Index, the first index designed to track stocks listed on the Dubai Financial Market (DFM), which Merrill Lynch launched in November 2006.

Tracker-10YIT-Dubai will track the value of the Dubai Investable Index allowing investors to take an immediate broad and liquid exposure to the Dubai equity market.

ReverseT-1YRC-Dubai will be the first listed reverse convertible linked to the Dubai Investable Index. It will guarantee a fixed coupon of 9.5%, and the initial investment on inception date will be safe as long as the Reference Index does not drop by 20% or more at anytime during the one year maturity of the Reverse Convertible.

Hedi Ben Mlouka, head of CEEMEA Equity Derivative Sales at Merrill Lynch concluded:

"The launch of the Dubai Investible Index signified a milestone in the development of the derivatives market in the MENA (Middle East and North Africa) region. Now Merrill Lynch's launch of two new certificates reaffirms our commitment to driving growth in this important market and leading innovation through the development of derivative instruments for clients and the wider GCC market."

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