Rajiv Kumar, director and senior executive officer at PhillipCapital (DIFC) Private observed that the futures and options landscape in the MENA region is transforming as markets mature, infrastructure improves and participation broadens, all against the backdrop of a geopolitically volatile environment.

“The events since February 2026 have tested the region but they have also clarified why robust risk-management infrastructure matters,” said Kumar. “Volatility of this kind is precisely what deep, liquid derivatives markets are built to absorb.”

Exchange traded derivatives activity in 2025 has remained robust, with major venues such as the Dubai Gold and Commodities Exchange (DGCX) and CME’s Middle East trading volume reporting record numbers. CME saw volume rise by 16% from the region in 2025 while DGCX saw a 30% year-on-year increase in 2025.

This year’s volumes are being shaped by a markedly different risk environment.

Retail and institutional engagement in the region is particularly notable.

“This pattern underscores a broader trend: trading engagement in futures and options isn’t confined to episodic spikes around specific events,” said Kumar. “Instead, participation is more consistent and multi-asset, particularly as retail and institutional channels deepen.”

Dubai’s financial hubs, notably the Dubai International Financial Centre, saw significant expansion in firm registrations in 2025, with new active registered companies rising 39% to approximately 2,525 year-on-year.

The total active firm base grew to around 8,840 by year-end, including substantial growth in wealth and asset managers — with over 500 such firms established in the centre.

“This surge in registrations reflects broader structural demand for sophisticated risk-management instruments such as futures and options,” said Kumar. “Increasing institutional presence — from hedge funds to asset managers — lays the groundwork for deeper derivatives usage, including for hedging equity, foreign exchange and commodity exposures.”

For 2026, the pace of new formation will be tested by the regional conflict and a higher cost of capital environment.

If 2025’s growth was led by firm formation and product launches, 2026’s has a sharper, more defensive edge, said Kumar. The combination of geopolitical shock, an oil price that swung from above $120 a barrel to the low $90s, and disruption to Gulf shipping has pushed institutions toward hedging across energy, foreign exchange, freight and rates.

“Periods of stress are when hedging stops being optional,” said Kumar. “We’re seeing demand for futures and options driven less by sentiment and more by genuine risk-transfer needs — corporates and institutions protecting energy costs, currency exposure and shipping risk in real time.”

Commodity and energy derivatives have moved to the centre of the regional story. With Brent posting one of its most volatile stretches in years — falling almost 19% in May alone after its earlier spike — exchanges such as CME and ICE, with their commodity franchises, sit at the heart of this hedging activity, alongside growing interest in volatility-linked products.

“Energy and commodity contracts are no longer a sideshow to the equity-index narrative; for 2026 they are central,” said Kumar. “When crude can move 20% in a matter of weeks, the value of transparent, exchange traded hedging tools becomes self-evident.”

Crucially, Kumar noted, the UAE has weathered the shock from a position of strength. S&P Global Ratings affirmed the country’s AA/A-1+ rating with a stable outlook during the conflict, citing liquid-asset buffers expected to contain conflict-related credit risk, with the government’s consolidated net asset position estimated near 184% of GDP, even as tourism, hospitality and aviation slowed.

“The macro backdrop has been resilient where it counts,” said Kumar. “Strong sovereign buffers, low public debt and a well-capitalised banking system give the UAE the capacity to absorb external shocks and keep its capital markets functioning — which is the foundation any derivatives ecosystem is built on.”

Retail interest is also expanding as trading platforms and smaller sized contracts increase.

“As trading platforms proliferate in the UAE and MENA region, derivatives products, particularly micro-contract futures, are helping to lower the entry threshold for individual investors, contributing to overall market liquidity and diversity of participation.”

While regional exchanges develop local capacity, Kumar noted that Asia remains a dominant force in global futures and options, accounting for 62% of global volume.

Increasing economic integration between Gulf Cooperation Council markets, North Africa and South Asian economies is strengthening demand for cross-listed products — especially equity index and commodity derivatives tied to regional growth narratives.

“This interaction is likely to shape product demand in the rest of 2026, particularly as regional exchanges seek linkage with global benchmarks,” said Kumar.

A notable milestone for the region in 2025 was the launch of Egypt’s first licensed futures market, initially focusing on index futures with plans to introduce single-stock futures and options.

“This is a clear indication of movement toward onshore hedging tools and structured markets beyond traditional equities and cash instruments,” said Kumar.

He added that the ongoing build-out of regulated derivatives venues across the region, such as ICE Futures Abu Dhabi, signifies a shift away from reliance on offshore markets for hedging and speculative needs.

One of the tangible product innovations in the region has been the launch of MSCI Equity Index Futures on ICE Futures Abu Dhabi.

“The suite includes MSCI UAE, Qatar, GCC Countries Combined and India index futures, all USD-denominated and structured to provide efficient access for both regional and global institutional investors,” said Kumar.

As a global leader in digital assets, the UAE has created regulatory regimes around digital assets to attract institutional interest in tokenised and hybrid derivative products.

“While tokenised derivatives remain nascent, the policy clarity emerging in the next 12 months enhances the region’s appeal for innovative product structures that blend traditional contracts with digital settlement and transparency features,” said Kumar.

Platforms experimenting with blockchain and smart contracts are exploring tokenised derivatives, driven by regulatory sandboxes and innovation hubs in the UAE.

“Where settlement and shipping faced disruption, the appeal of tokenised, blockchain-based infrastructure — continuous settlement, transparency, resilience — comes into sharper focus but broad adoption still depends on continued rule-making through 2026 and beyond.”

Kumar expects the rest of 2026 to see continued integration of AI and algorithmic systems across futures and options execution.

DGCX's commercial director outlined plans to introduce a same-day (T+0) gold bar contract, as well as a small-denomination product designed to broaden retail participation.

In March, the Egyptian Exchange introduced futures contracts to improve liquidity and provide tools for risk management.