ADS Securities quietly doubles its daily trading volumes in less than a year, with FX trading proving more of a draw than sluggish stock markets to big international banks.
ADS thrives on gold and currencies
Gold and currencies have proven more attractive propositions than languid stock markets for ADS Securities as the company has doubled trading volumes to as much as US$4 billion (Dh14.69bn) a day this year.
Since launching last year, ADS has increased its daily volumes of foreign exchange and bullion trades to between $3bn and $4bn per day - about double the amount registered in February.
"You felt the market needed a shock awake to get it back in the region," said Philippe Ghanem, the managing director of ADS. "ADS is like a constant shock to the market."
The increase in activity was being driven by an increase in the institutional clients, largely European and Asian banks, which have shunned investments in local equities.
Middle Eastern investors accounted for a large proportion of ADS volumes, in contrast to recent years when Gulf investors had sought to do business with big-name international banks and securities houses overseas, Mr Ghanem said.
But big institutional clients were generating the highest volumes for the trading house.
"ADS today generates a very large amount of volumes coming from the region and Asia, mostly because of investing abroad and trading abroad, but also investing and trading here," Mr Ghanem said.
In May, ADS announced it had signed up Goldman Sachs and BNP Paribas to provide prime brokerage services on its trading platform. The company recently opened an office in London and is seeking regulatory approval from the UK Financial Services Authority to expand dealing there, while the company's staff has grown from 35 to 110.
Activity in equity trading has all but petered out in the UAE during the past few years, with volumes on the Dubai Financial Market a fraction of the peak in trading activity reached during 2007.
The value of the Dubai Financial Market General Index has fallen 78.1 per cent since the market's last peak before the financial crisis and the collapse of Lehman Brothers in September 2008.
The slump was underscored on Thursday by the failure of the UAE and Qatar to secure an upgrade to "emerging-market" status from MSCI, the index provider.
About half of the UAE's brokerages have closed in the past year, while investment banks including HSBC Middle East, Rasmala Investment Bank and Shuaa Capital have been scaling back or closing their retail brokerage arms.