What does the launch of a new derivatives exchange mean?

Financial experts and advisors welcomed the Qatar Financial Center Regulatory Authority’s announcement of the development of a new regulatory framework for listed derivatives and the issuance of the Derivatives Markets and Exchanges Rules for the year 2023, which will contribute to the establishment of a regulatory framework in the Qatar Financial Center that allows the establishment of a derivatives exchange, in addition to a counterparty for the central clearing house to ensure the effectiveness of the process. Settlement and settlement risk management. The experts revealed to Al-Sharq the nature of the derivatives exchange’s work, and they also gave advice to investors to avoid risks in trading operations, especially those who are not fully aware of the nature of derivatives market transactions. A fundamental pillar In a statement to Al-Sharq, Dr. Abdullah Al-Mansouri said that the issuance of the rules for derivatives markets and stock exchanges for the year 2023 constitutes a fundamental pillar in the development of the Qatari capital market, and the promotion of the stock exchange position to the ranks of advanced markets. Al-Mansoori added that the establishment of the derivatives exchange will give investors the opportunity to trade options and futures contracts related to the shares listed on the Qatar Stock Exchange, in addition to contracts related to the Qatar Stock Exchange index, which will be listed on the new derivatives exchange. This stock exchange will also provide opportunities that allow investors to better manage and diversify their financial portfolios. In an interview with Al-Sharq, economist Bashir Youssef Al-Kahlout said: The announcement of the Qatar Financial Center Regulatory Authority to develop a new regulatory framework for listed derivatives and the issuance of rules for derivatives markets and exchanges for the year 2023 is a qualitative step that may contribute to increasing trading volumes in the stock exchange, indicating that Many Qatari investors buy stocks as a long-term investment, and this is what happens with leading stocks such as shares of telecommunications companies, banks, and industries, just like investing in gold or investing in financial assets, in exchange for annual profits, and over time, stock prices rise, thus constituting a guaranteed return for the investor. Mr. Al-Kahlout adds that, in contrast to this long-term investment strategy, the derivatives market always has a fixed term, for example, the offer is in exchange for a delivery period of three months, six months, or nine months, and so on, and the offer is to buy a share, for example, in return for paying a small part. of the value, but at the end of the period the stock must be sold according to its term according to the nature of commodity trading, or it is closed at the price available at that time, and then the derivatives market or futures trading can provide a big profit if the trader is lucky and good luck, and he can also lose a lot Likewise, therefore, we advise those who wish to enter such trades to enter this field gradually with a value commensurate with his investment capabilities, and experience in this field should also be taken into account, as there are investors who trade in global derivatives markets on the London and New York stock exchanges, and these margin of risk they have can be large. In view of their experience, as for those with limited experience, it is advised to start step by step until they understand the nature of the market and the expected profit margin during their trading. A basic building block In a special analysis for Al-Sharq, the financial advisor, Ramzi Qasimia, said: The step of developing a new regulatory framework for listed derivatives and issuing the rules for derivatives markets and exchanges for the year 2023 comes as a basic building block in light of the provision of new and diversified investment products for investors that may be limited in the current period to qualified investors and institutional investment companies With the aim of providing new and diversified products that enable them to hedge and manage risks effectively, which would attract more investments and traders to the stock exchange. Qasimia adds that attracting more investments to the stock exchange would substantially raise the trading volumes and increase the momentum and thus the entry of a new segment of investors to the stock exchange. In addition, increasing the volumes of trading values ​​would improve the stock exchange’s global classification and transfer it from an emerging market to an emerging market. A developed market, in addition to that, this step comes in order to provide an attractive and regulatory environment for local and foreign investments, and the derivatives market also provides a regulatory environment that diversifies products and stimulates the launch of new investment products. Counselor Ramzi concludes his speech by emphasizing that this step comes to establish a regulatory framework in preparation for launching the derivatives market with the aim of providing effective investment methods, methods and investment products for risk management and hedging, as it gives more depth and efficiency to the financial markets. Development of the Stock Exchange In an analysis of Al Sharq, economist Ahmed Aqel says that the derivatives market is very important and essential and will have a very important role in developing the Qatar Stock Exchange and bringing it to the ranks of developed markets, as this market is one of the basic and supportive conditions for accessing developed markets from emerging markets. Therefore, the market opens the door for investors to use many financial tools such as the issue of “options” and purchases or futures trading, whether it is for stocks or the stock index itself, and therefore it opens the door for investors and provides them with new financial tools, methods and new options that can be dealt with better, easier and more. Flexibility, and this helps traders to improve the management of their investment portfolios, as well as to develop work and maximize profits at times, especially in light of options that can be traded such as buying and selling forward, and these laws are all present on the Qatar Stock Exchange. The economist adds that it is important for everyone here to know that these derivatives help investors, especially portfolios and financial institutions, to manage and diversify their investments, and this will have a very important and essential role during the coming periods to attract many investors, especially since there are many derivatives that will make some operations faster and easier, such as operations Buying and selling at a specific price and date, and there are many options that will be available to traders to deal in these ways, and these will mainly contribute to the development of trading activity in the stock exchange in general. Raising the rating Experts said in their interview with Al Sharq that raising the global credit rating agency, Fitch Ratings, the long-term rating of the State of Qatar from stable to positive, confirming its credit rating at (AA-) will enhance the morale and performance of the market. The rating agency indicated, in a report, that the revision of the rating to positive from stable reflects its expectations that debt to GDP will remain in line with or less than the average outlook “AA”, and that the expansion of the North Field will increase the country’s additional export capacity of liquefied natural gas. . Fitch’s report indicated that Qatar’s rating at (AA-) is supported by a number of key elements, including large net foreign sovereign assets, Qatar is one of the highest per capita incomes, in addition to a flexible public financial structure. Fitch also expected that the general budget surplus of the State of Qatar would reach about 10 percent of GDP in 2023, compared to 13 percent in 2022. The report confirmed that the Qatar Central Bank’s measures contributed to reducing banks’ dependence on foreign financing from $197 billion in 2021 to $186 billion in 2022.