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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2007ABU DHABI SECURITIES MARKETThe market capitalization of the companieslisted on ADSM during the first half of 2007was US$ 95.7 billion.Rashid Al BloushiActing Director GeneralAt the first half of 2007 ADSM had 64companies listed, whereas, the number oflisted companies at the first half of 2006was 59. The index increased from 2999.66during the first half of 2006 to 3,544.65during the first half of 2007.The value of trading increased from US$13.5 billion (AED 49.7 billion) in 2006 ascompared to US$ 14 billion (AED 51.5billion) in 2007, an increase of 3.7%. Thisincrease was a result of the increase in thenumber of trades to 18.3 billion in the firsthalf of 2007 as compared to 7.0 billion forthe same period in 2006. The tradingvolume was executed via 465,936 trades inthe first half of 2007 as compared to473,186 trades for the same period of 2006.The daily average value of trading in the firsthalf 2007 increased to US$ 110 million(AED 405 million) compared to US$ 91million (AED 337 million) in 2005 during thesame period. There were 127 trading dayscompared to 147 days during the sameperiod of 2006. The daily average of tradedshares also rose to approximately 143million shares as compared to 47 millionshares in 2006.The market capitalization of the companieslisted on ADSM during the first half of 2007was US$ 95.7 billion (AED 351.5 billion) ascompared to US$ 93.8 billion (AED 344.4billion) during the same period of 2006indicating an increase of 2.1%.HISTORY AND DEVELOPMENTTrading securities in the United ArabEmirates dates back to the early 1960swhen public shareholding companiesstarted to exist. It was a generic andhaphazard era with a securities marketcreated and operated by the mediation ofbrokerage firms.Trading in such an unstructured environmenthad created flaws and imbalances in themarket, especially with the absence of aproper mechanism to conclusivelydetermine the value of securities, theabsence of supervision and control ofbrokerage firms as well as the lack oftransparency and disclosure by the tradedcompanies.This tremulous situation had an adverseimpact in establishing fair policy forevaluating securities, and resulted in severefluctuations in the market. In view of thischaos values of most of the shares wereoverstated leading to consequences andheavy losses to the investors.Taking the above facts into consideration,the issue of regulating the securities marketbecame significantly important with a view toits crucial role in the domestic economy.Plans have been set up to organize themarket in order to ensure integrity andsmoothness of trading and the movementsof prices based on the power of supply anddemand and the information disclosed bythe listed companies. Within this framework,intensive efforts resulted in the promulgationof Law No. (4) of 2000 concerning theestablishment of the UAE Securities &Commodities Authority and theestablishment of securities market.FUTURE OUTLOOK• Continue activities to support growth inlistings, turnover and liquidity:• Encourage listing of family companiesand foreign companies• Increase system capacity to cope withgrowing market volumes• Enhance IT processes and informationdistribution• Enhance market standards in the areas of:• Implement corporate governancestandards and principles• Capital adequacy and the surveillanceof brokers• Introduce broker education andqualification• Further enhance registry and CSDservices• Expand the Bond Market• Link trading with other internationalsecurities markets• Strengthen regulations and rulesincluding:• Commercial and capital market law• Securities Regulation• Develop ADSM rules for listing, brokersand tradingPAGE 26