Abu Dhabi Securities Exchange slashes trading fees by 22%

The Abu Dhabi Securities Exchange (ADX) has said that it will reduce overall trading activity fees on all exchange transactions starting Sunday, February 14.

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

The move is part of the “ADX One” strategy which aims to double the market capitalisation of companies listed on the exchange in the next three years.

As part of the new fee structure, ADX has created an incentive plan, applied on an annual basis, for brokerage firms who generate Dhs20m worth of trading commission.

Firms that fulfill the annual incentive requirement are exempt from paying any trading commission to ADX for the year in which the threshold is met.

The new initiative favours investors seeking to broaden and diversify their investment portfolios without incurring high transaction costs. The market capitalisation of stocks listed on ADX crossed Dhs750bn for the first time in 2020, a 39.7 per cent increase from Dhs533bn in 2019, and has reached Dhs805bn by the end of January this year.

Meanwhile, the value of securities traded on ADX increased by 28 per cent to Dhs72.8bn in 2020 from Dhs56.8bn in 2019.

The number of foreign investors on ADX increased 38 per cent in 2020, while the value of shares they traded rose by 6.5 per cent to Dhs62.6bn, whereas institutions trading value rose 35.6 percent to Dhs111.1bn last year.

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. The last time a similar move was undertaken was in June 2019 as part of Abu Dhabi’s Ghadan 2021 plan of lowering the cost of doing business in the emirate.

“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.,” said Mohamed Ali Al Shorafa Al Hammadi, chairman of ADX.

Saeed Hamad Al Dhaheri, chief executive of ADX, 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. 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 capitalisation and fueled our ambition to have it doubled by 2024.”