The head of the new Bahrain Financial Exchange has said he is not concerned about launching a new exchange in the Middle East, despite continued market pressure to merge existing bourses to boost liquidity.
Jignesh Shah, chairman of the BFX, says pressure to reduce the number of exchanges in the Middle East “doesn’t worry us”.
“We will complement the existing exchanges in places like Saudi Arabia, Bahrain, Kuwait or Abu Dhabi. Where there is strong economic growth investors will come, and they will come to organised markets that operate under best practices. My view is the more the merrier,” he adds.
The introduction of a new exchange comes as the UAE plans a merger of two of its bourses in order to boost liquidity. There are already eight financial exchanges in operation in the six GCC countries alone.
Shah also says he is not concerned about launching a new exchange in the region while the political tension in Egypt is depressing stock markets. “In the long term, it is fundamentally right [to launch the BFX] and it gives us time to build the brand and get the infrastructure right before risk appetite returns.”
In the long term, it is fundamentally right [to launch the BFX] and it gives us time to build the brand
Jignesh Shah, BFX
Trading on the BFX will be officially launched on 7 February. Initially the only product on offer will be an Islamic product, a commodity murabaha, often used by banks as the base for Islamic loans. Trading in some limited conventional products will be launched a month later.
Arshad Khan, the chief executive officer of the BFX, says the exchange is not currently seeking companies to list shares or bonds on the platform, but will instead spend the next 12 months focusing on building liquidity in the small number of products it will launch trading in this year.
“Once we have a good spread of investors using the BFX, then we will become the market of choice for listings,” says Khan.