Gulf-based futures markets are maturing but there are unique challenges - panel
Top traders and brokers in the Gulf debated on Thursday the
pros and cons of trading in Dubai and saw some of the pressures
similarly impacting other key markets.
Speaking at the FOW Trading Middle East in Dubai on Thursday,
a panel of brokers said the Gulf-based futures markets were
maturing but there are unique challenges.
Arshad Khan, an executive director at broker Mena Corp and a
former founder of DGCX, told the delegation the local futures
market was under threat because "liquidity is flowing to the
over-the-counter market and this is something we are trying
to stem as a large Futures Commission Merchant".
Khan said his customers are diverse: "Our clients are hooked
up to the international markets, these clients care about
liquidity and spread. Me-too products are not working any
more, there is more interest in something innovative,
something new. The other challenge is unsophisticated
investors, we have to work with them."
Jamie Gavin, the head of Europe, Middle East and Africa
over-the-counter clearing sales at Societe Generale, told FOW
Trading Middle East his clients are similarly demanding:
"Clients are looking for capacity and liquidity, the ability
to trade through global market access as well as additional
services such as co-location, algos as well as other
joined-up services, and they want it cheap."
A unique challenge for large investment banks acting brokers
however, is the capital requirements being imposed on them by
global banking regulators: "It is impossible to underestimate
the impact that capital and regulation is having on the
market. We have to change our business models to deal with
the capital changes. Similarly, we are pricing our services
geared towards the new capital environment.
Khan added: "When the markets go through these types of
regulation, you would expect the markets to tighten. For a
big FCM such as ours, we seen an opportunity because the
regulation will place a squeeze on smaller players. There is
however a risk that the regulation could squeeze these
smaller firms out of business altogether."
Akash Kular, chief executive of Synergy Trading Associates,
told the delegation he sees Dubai as a beneficiary of tighter
regulations in larger neighbouring countries. He said: "I
expect to see more demand from the sub-continent. As the
regulations there get tighter and tighter, there will be more
a shift to Dubai. It's a real shame there are not more
Americans here, when I was in Chicago earlier this month,
everyone was asking about India."
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