Markaz Presents Options Workshop in Euromoney Kuwait Conference

11/03/2008

Markaz was a lead sponsor for the Euromoney Kuwait Conference that was held March 11-12 2008 in the Sheraton Kuwait Hotel. Mr. Bader Al-Ghanim, VP – Local & GCC Investments and Fund Manager of Forsa Fund, the first options fund in the Middle East and the sole options market maker in Kuwait, and Hussein Zeineddin, AVP – Derivatives presented a workshop about options.

The phenomenal growth in Middle Eastern equity markets, which is punctuated by severe declines and uncomfortable levels of volatility, highlighted the need for protecting the downside. This can be accomplished through derivative products, and options specifically, which are proven to be powerful and popular derivatives instruments. Option trading did not exist in the Middle East Stock Exchanges or in the Arab Stock Exchanges until “Markaz” initiated a proposal to provide the Options service at the Kuwait Stock Exchange in 2002. Markaz suggested establishing a system for trading options through a fund called "Forsa Fund" to work as a Market Maker for Options trading in the first stage. After analyzing the characteristics of the Kuwait Stock Exchange (KSE), its nature of risks and determining the needs of investors, a mechanism for option trading was suggested. Rules and Regulations were created in consultation with the KSE and an Option trading system was developed combining Markaz, Brokers and the KSE. Testing and measurements were made continuously till March 2005 when the KSE allowed Call options to be traded by Markaz. On March 28, 2005, Call options became available for the first time at the Kuwait Stock Exchange. 13 stocks were traded on the first trading day through 75 contracts with a total strike value of KD2,378,150. Today, Forsa Options are traded on a group of 55 listed stocks covering every sector after the market hours between 12.55 to 1.15 p.m with an average volume of 60 million shares and value of KD 2 million per month. Forsa Options are written on maturities of 1, 3, 6, 9, and 12 months for different strikes. Being the pioneer of the derivatives market in Kuwait, Markaz understands the importance of a developed derivatives market and continues its efforts to increase the presence of the derivatives and structured products in the region. Markaz's Structured Finance team continues to be the only market maker for Options at the Kuwait Stock Exchange, entailing the high level of skills, experience and resources acquired by Markaz to perform such operations with high level of professionalism. Markaz will continue to expand derivatives’ capability regionally, dealing with legal and regulatory constraints will remain the primary challenge to our progress.In 2008, Markaz plans to expand the options products range to include put options, index options and to allow investors to write options through the market maker. Markaz also plans allowing the trading of options during trading hours. Kuwait Financial Centre S.A.K. 'Markaz', with total assets under management of over KD1.3 billion as of December 31, 2007, was established in 1974 has become one of the leading asset management and investment banking institutions in the Arabian Gulf Region. Markaz was listed on the Kuwait Stock Exchange (KSE) in 1997; and was recently awarded a BBB+ corporate rating by Capital Intelligence Ltd.