ADX in custody deal with Deutsche Bank

The Abu Dhabi Securities Exchange (ADX) yesterday signed a custody agreement with Deutsche Bank as the burgeoning bourse pushes ahead with an ambitious plan to become a key global stock exchange.

The agreement, ADX's fourth with a bank, is designed to attract foreign capital as it will allow Deutsche to sponsor and support expatriate institutional investors, who are pouring into the UAE to take advantage of its fast growing economy.

"This agreement will encourage and facilitate further international investment in Abu Dhabi, which will lead to a broadening of the exchange's international investor base," ADX's CEO Tom Healy said after signing the deal with Henry Azzam, Deutsche Bank's CEO for the Middle East and North Africa.

"Abu Dhabi is a rapidly growing economy and ADX is responding to investor demands to diversify the services on offer."

Healy's figures showed nearly 12 per cent of listed ADX stocks are currently owned by foreign investors, mainly from Britain.

"While the execution of trade takes place through brokers, a custodian performs key functions such as opening cash and securities accounts, settlement of trades, collection of dividends and safeguarding clients' assets. This custody agreement is a further step in providing high quality custodial service and easier access to Abu Dhabi's capital market," Healy said.

"Increasing foreign investment in Abu Dhabi's capital market is an integral part of the government's strategy. Foreign, particularly institutional investment is vital for its long term sustainability… hence we welcome Deutsche Bank as one of the leading custodians globally to assist with the continued globalisation of the investor base of the ADX market."

Azzam said the agreement would also benefit Deutsche Bank as it would support its global transaction banking business in the oil-rich Gulf.

"Deutsche Bank is one of only a few international banks offering its clients local custody services in the UAE. We have worked closely with ADX over the past 12 months to develop a best in class product, helping our client base gain access to the debt and equity securities listed on the ADX," he said.

"The UAE's pioneering economic initiatives are generating strong interest from our regional and international clients particularly in Abu Dhabi listed securities."

ADX has signed similar agreements with HSBC, National Bank of Abu Dhabi and Standard Chartered Bank as part of its plans to woo in more foreign capital.

A custodian

Is an integral part of the chain of intermediaries that administers the investment of foreign institutional investors.

A custodian performs key functions in trading such as opening cash and securities accounts, settlement of trades, collection of dividends and safeguarding clients' assets.

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