The Hindu Business Line : `Dubai financial exchange generates interest among Indian cos, FIs'

THE Dubai International Financial Exchange (DIFX), set for an official launch on September 26, could serve as a significant intermediate global financial centre for Indian firms and financial institutions seeking access to international markets, according to its Chairman, Mr Lynton Jones.

In an interview to Business Line prior to the much-awaited launch, Mr Jones said that DIFX has generated a lot of interest among Indian companies and financial institutions.

"In our discussions earlier with firms in India and the Indian business groups in Dubai last week, we find that there is a strong interest in the Indian market for an intermediate financial centre that will provide access to international markets."

Mr Jones indicated that in a year's time, he anticipated listings by more than half a dozen Indian companies at the DIFX. "We are mainly expecting secondary listings in the form of Depository Receipts," he said.

Targeting mid to large-sized cos: DIFX listing rules indicate that companies should have a minimum market capitalisation of $50 million and have three years' accounts prepared to or reconciled with IFRS rules. "DIFX is primarily intended for mid to large-sized companies. Typically, we are looking at companies capitalised at between $50 million and $150 million, though it could go up to $500 million and $700 million," Mr Jones said.

DIFX has been established at Dubai's free zone financial district — the Dubai International Financial Centre. It is set up on the lines of the London and New York exchanges, but its Chairman plays down the possibility of directly competing with London or New York. "We are not seeking to compete with London or New York. Rather, we are looking more at the type of activity that is taking place in Hong Kong and Singapore. We hope to reach this level of activity in five years," the Chairman said.

DIFX 's operations would be complementary to leading international bourses including the Mumbai exchange, he said.

Low-key launch: DIFX will have a low-key launch with five securities being listed and four members operating remotely from London. "We are bringing in more members from the region in the near future. We also expect to have 10 to 12 brokers operating at the exchange by the end of the year - a mix of people from London and the Gulf region," Mr Jones said.

DIFX hopes to receive approval for trading in derivatives next year. "This will be the first time for such activity in this region," he said. A clearing house is also on the cards by later next year.

For the Sub-Continent, DIFX could provide access to a significant number of international investors including major investment banks, Mr Jones said. "The regulatory measures will be of international standards. We are regulated by the Dubai Financial Services Authority (DFSA) — an independent regulator inside the DIFC. The DFSA is a certified associate member of the International Organisation of Securities Commissions (IOSO)," he said.

More liquid securities: The DIFX will provide a larger and more liquid securities market for investors and will be fully open to foreign investment. It plans to offer products such as equities, bonds and Islamic financial instruments. It will be the first exchange to introduce index products to the region, including Sharia'a-compliant index products.

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