The second-largest stock market in the Arab region, Abu Dhabi Securities Exchange (ADX) is reducing its total trading activity fees on all exchange transactions from 14th February.
The move is part of its ‘ADX One’ strategy to double the market capitalization of firms listed on the exchange over the next three years.
This is the second time that the exchange has reduced its charges in the past two years to further increase market liquidity. In June 2019, the ADX stock trading fee was reduced as part of Abu Dhabi’s Ghadan 2021 strategy to lower the cost of doing business in the Emirate.
Under the new initiative, fees of all transactions that occur on ADX are to be reduced by more than 22 percent to 0.175 percent from 0.225 percent, effective February 14.
Mohamed Ali Al Shorafa Al Hammadi Chairman – ADX
“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. Abu Dhabi continues to diversify its economy on a path of sustainable long-term growth, and we are fully aligned with this vision. We will continue to deepen our markets through a wide range of products and services that meet the evolving needs of our stakeholders.”
As part of the new fee structure, ADX has built an incentive scheme for brokerage firms that generate $5 million (Dh20 million) worth of trading commission. This scheme will be implemented on an annual basis. The companies meeting the annual incentive requirement will be excluded from paying any stock trading fee to ADX for the year in which the threshold is met. The new program will benefit investors looking to expand and diversify their investment portfolios without incurring high transaction costs.
The reduction in transaction fees will improve total market depth by reducing the bid-ask spread on the exchange, which is an efficient way to calculate market liquidity. Further, the latest initiative comes amid ADX’s attempts to draw more investors by providing more high-quality services and products.
“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. It will also further strengthen our commitment to provide the highest levels of customer service,” said Saeed Hamad Al Dhaheri, Chief Executive of Abu Dhabi Securities Exchange.
