Interview: Khalifa Salem Al Mansouri
How is financial innovation impacting local capital markets and streamlining business operations?
KHALIFA SALEM AL MANSOURI: According to the 2019 “MENA FinTech Venture Report” the UAE is the largest financial technology (fintech) centre in the region, accounting for 46% of all fintech start-ups, as well as 47% of all deals and 67% of total fintech funding.
In 2019 investors funded 37 fintech start-ups, with regional investors accounting for 86%. Of these investors, 41% had not previously invested in fintech start-ups, showing an increasing appetite in fintech. Moreover, local governments have launched $1.4bn in funds that are open to fintech investments, increasing the potential pool of capital available for start-ups. According to the Milken Institute, the UAE has received the bulk of venture capital investment in the region, with fintech being a main investment area.
ADX realized very early that financial innovation will have an impact on stock markets; thus it became the first stock market in the MENA region, and third globally, to adopt blockchain in its e-voting services for the annual general meetings of its listed companies.
We have also opened channels with various stakeholders to identify the common principals, standards and business rules needed for the successful implementation of distributed ledger technology in posttrade operations, with the aim of enhancing the speed and security of capital market transactions.
What changes are being implemented to promote sustainable finance and investments?
AL MANSOURI: There has been a notable increasing demand by investors from around the world for investment management products that adhere to some form of environmental, social and governance (ESG) criteria as a powerful driving force.
In this context, ADX is a partner exchange of the UN Sustainable Stock Exchanges initiative, from which ADX aims to promote sustainability and transparency in capital markets. We are also an active member of the World Federation of Exchanges working group on sustainable finance and ESG matters.
The ESG disclosure guidelines for listed companies have been issued. The launch of this set of 31 key performance indicators is aligned with ADX strategy, which is designed to support economic growth while providing a sustainable trading environment and encouraging the business community to adopt sustainability practices. It will also raise the standard of governance, by putting into operation sustainability standards and integrating them into both the ADX strategy and listed companies alike.
ADX is one of the signatories of the Abu Dhabi Sustainable Finance Declaration, which comprises a united front to foster positive economic, social and environmental impacts, and advocate sustainable finance and investments for the long-term well-being and growth of the country’s economy.
In what ways might non-hydrocarbons-based businesses be further encouraged to list?
AL MANSOURI: ADX has the technological infrastructure needed to list any form of financial instrument while also having a large number of institutional investors already operating on the exchange. The X– Stream trading platform, provided by Nasdaq OMX and implemented at ADX, brings us into line with some of the world’s largest exchanges and provides it with a modern internationally compliant, multi-asset framework for future expansion.
As of the end of 2019 ADX had 8692 institutional investors, of which 6572 were institutional investors from abroad. From the beginning of 2019 to the end of the year, approximately 494 institutional investors registered on the exchange, of which 402 were foreign institutional investors. Furthermore, the top-25 asset management companies in terms of assets under management all are actively operational on the exchange.
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