ADX reduces transaction fees on trading activities

The Abu Dhabi Securities Exchange (ADX) announced on Saturday that it is reducing overall trading activity fees on all exchange transactions starting from February 14 as part of its ‘ADX One’ strategy to double the market capitalisation of companies listed on the exchange in the next three years.

The new pricing structure will be the second time the exchange has reduced its charges in the past two years to enhance market liquidity further. Trading commission on ADX was reduced in June 2019 as part of Abu Dhabi’s Ghadan 2021 plan of lowering the cost of doing business in the Emirate.

Under the initiative, fees of all transactions that occur on ADX are to be reduced by more than 22% to 0.175% from 0.225%, effective February 14.

As part of the new fee structure, ADX has created an incentive plan, applied on an annual basis, for brokerage firms who generate Dhs20 million worth of trading commission. Firms that fulfil the annual incentive requirement will be exempt from paying any trading commission to ADX for the year in which the threshold is met. The new initiative favors investors seeking to broaden and diversify their investment portfolios without incurring high transaction costs.

Commenting on reducing transaction fees, Mohamed Ali Al Shorafa Al Hammadi, Chairman of Abu Dhabi Securities Exchange, said: “The exchange’s “ADX One” strategy further enhances our position as one of the most competitive exchanges in the region. Reducing overall transaction costs for trading on the exchange is one of many initiatives we are undertaking to achieve our strategy of attracting new liquidity sources and making listing and investing in ADX an attractive value proposition. Abu Dhabi continues to diversify its economy on a path of sustainable long-term growth, and we are fully aligned with this vision. We will continue to deepen our markets through a wide range of products and services that meet the evolving needs of our stakeholders.”

The reduction in transaction fees will increase overall market depth by decreasing the bid-ask spread on the exchange, an effective way to measure market liquidity. Furthermore, the new initiative comes amid ADX efforts to attract more investors by offering more high-quality services and products.

Saeed Hamad Al Dhaheri, Chief Executive of Abu Dhabi Securities Exchange, added: “Cutting overall transaction costs on all trades taking place on ADX will complement measures we have recently taken to attract new institutional investors and generate greater liquidity. It will also further strengthen our commitment to provide the highest levels of customer service.

Our 2020 initiatives, including the introduction of market makers and covered short selling, have increased the number of institutional investors on ADX over the past year. Meanwhile, the rise in foreign ownership limits of several listed companies alongside new listings aided the increase of our market capitalization and fueled our ambition to have it doubled by 2024.”

The market capitalisation of stocks listed on ADX surpassed Dhs750 billion for the first time in 2020, a 39.7% increase from Dhs533 billion in 2019, and has reached Dhs805 billion by the end of January this year.

Meanwhile, the value of securities traded on ADX increased by 28% to Dhs72.8 billion in 2020 from Dhs56.8 billion in 2019. The number of foreign investors on ADX increased by 38% in 2020 while the value of shares they traded rose by 6.5% to Dhs62.6 billion, whereas institutions trading value rose 35.6% to Dhs111.1 billion last year.

Abu Dhabi Securities Exchange has announced recently that Foodco National Foodstuff has listed its shares on the exchange’s Second Market under the trading symbol FNF. It is the first company to be listed on ADX this year. Foodco, which imports and distributes food and consumer staples and provides logistics services, listed 280 million shares with a nominal value of Dhs1 per share, giving the company a share capital of Dhs280 million. The listing brings the total number of securities on the exchange to 89.

The retail and wholesale portfolio of Foodco National Foodstuff Company encompasses a wide range of essential commodities and products, which are marketed through company’s brands.

As of September 2020, Foodco had a cash flow balance of Dhs7.352 million. Foodco Holding is the majority shareholder of Foodco, controlling 98.75%, or 276.5 million of its shares.

Abu Dhabi Securities Exchange Abu Dhabi Securities Exchange  was established on November 15 of the year 2000 by Local Law No. (3) Of 2000, the provisions of which vest the market with a legal entity of autonomous status, independent finance and management.