"There was no volume in the older products because there was no retail access," said Armen Papazian, the exchange's director of innovation and development. The bank's institutional members, such as Deutsche Bank and Credit Suisse, meanwhile, had no reason to trade on the DIFX when the products, such as notes based on the S&P 500, were readily available elsewhere, he adds.
The 14 new products are based on the Dubai, Abu Dhabi and Qatar indexes and on Morgan Stanley commodity indexes. Further products, including a Citigroup note based on Dubai and Oman indexes, and several Islamic products, are due by October, Papazian says.
Investor interest has been particularly keen in reverse tracker notes, as shorting is not permitted in the UAE. Meanwhile, on the sell-side, four local institutions are preparing to issue equity-linked notes. Restrictions on foreign ownership mean foreign institutions cannot fully hedge structured products by buying the underlying, but local institutions would be able to do so, Papazian explains.