How will new market-making services boost DFM trading?

Dubai Financial Market (DFM) investors could see enhanced trading conditions following the introduction of new market-making services by EFG Hermes UAE LLC. These services aim to bolster liquidity, streamline pricing, and facilitate smoother transactions, particularly in securities with limited trading volumes. EFG Hermes, a Capital Market Authority-regulated financial entity, unveiled the services in line with its expansion in the UAE’s capital markets.

Market makers operate by persistently proposing buy and sell prices for securities, thus narrowing the bid-ask spread and bolstering share availability. For retail investors, heightened liquidity could result in faster transactions and reduced trading costs. Institutional investors might also gain from improved execution when handling larger volumes. However, the precise advantages will hinge on prevailing market conditions and the specific securities involved.

This initiative aligns with the Dubai Financial Market’s (DFM) Market Maker program, which aims to augment market depth, promote orderly trading, and bolster investor confidence. Khalifa Rabba, Chief Operating Officer of DFM, expressed delight at EFG Hermes' addition to the market-making roster. He emphasized that the service underscores the evolving market ecosystem and the increasing importance of institutional liquidity provision in facilitating efficient trading.

The move is anticipated to bolster DFM-listed companies' appeal to regional and international investors. Ahmed Waly, Global Head of Brokerage at EFG Hermes, stated that the introduction of market-making services signifies an expansion of the company’s trading prowess. He highlighted their commitment to elevating execution quality and market efficiency for clients.

EFG Hermes' Head of Electronic Trading and Execution Services, Amr ElShamy, underscored the role of technology in ensuring reliable and efficient trading. The company's electronic trading infrastructure is geared towards continuous two-sided pricing for both institutional and retail investors. Raymond Wasef, Head of Market Making and Liquidity Provision at EFG Hermes, noted that deeper and more liquid markets could stimulate broader investor engagement.

The firm anticipates its new services will dovetail with its existing brokerage, investment banking, research, and capital markets operations.

This launch coincides with Dubai's ongoing endeavors to deepen its capital markets, lure international investment, and cement its status as a global financial hub.