Qatar’s stock exchange will introduce a new derivatives market that allows the trading of options and future contracts on local stocks and the main equity index, the country’s financial center regulatory authority announced on Monday.
After a three-month consultation with investors and market participants, the Qatar Financial Centre Regulatory Authority announced the new regulatory framework for listed derivatives.
“The launch of the derivatives exchange will be an important milestone in the development of the Qatar capital markets and Qatar’s ambition to move to developed market status,” said the stock exchange’s acting CEO, Abdulaziz Al-Emadi.
Option contracts give their holders the right, but not the obligation, to buy or sell shares of the underlying company at a specific price on or before a certain date, usually referred to as the expiration day.
Future contracts on the other hand are types of derivatives whereby the involved parties transact shares of a specific company at a predetermined future date and price.
The exchange also plans to set up an entity that will provide clearing and settlement services for trades in options and derivative contracts, QFCRA said in a statement.
The market will allow options, contracts linked to underlying assets, and futures, contracts set at a future date, to be traded in local stocks and the market’s equity index.
Michael Ryan, CEO of the QFCRA, added: “The regulatory authority looks forward to working with the Qatar Stock Exchange to launch the new derivatives exchange, as this exchange will provide opportunities that allow investors to better manage and diversify their financial portfolios.”
The bourse’s rules also enable the central clearing house to manage settlement risks and ensure an efficient settlement process.
Al-Emadi added: “The issuance of the Derivatives Markets and Exchanges Rules for the year 2023 establishes the necessary regulatory framework for the Qatar Stock Exchange to move forward with its plans to establish a derivatives exchange and the counterparty to the central clearing house.”
According to the American finance company and index benchmarker MSCI, Qatar, is still identified as an emerging market. The leading liquefied natural gas exporter is now redirecting its focus to the development of its equities market by opening it up to a wider investor base and introducing more listings.
In January, Qatar’s bourse welcomed its first initial public offering, IT services firm MEEZA, in almost three years under new regulations which allowed companies to offer a price range to test investor appetite and determine pricing.