The Mena region has been home to some of the world’s earliest financial markets.
The first documented evidence for an options trade dates back to early 15 century Italy, where traders used to call and put options to mitigate price risk in business transactions.
Mena should have a vibrant options market today with this history, right? Not exactly.
No, the Mena (the Middle East and North Africa) countries do not have an integrated stock trading market.
This post explains what options are, how they work, why modern Mena stock exchanges do not offer them, and what steps to establish an options market in the region.
What are options?
Financial option contracts give investors the right but not the obligation to buy or sell an asset at a specific strike price on or before a certain date.
While it is possible for investors to lose the entire premium paid for an option, options allow investors to take a relatively small position and make large directional bets.
However, several regional exchanges in the Mena region offer investors opportunities to invest money into stocks or bonds in these markets.
Bahrain has two major stock exchanges – the Bahrain Stock Exchange (BSE), which is for domestic investors, and the Bahrain International Finance Centre (BIFC), which is for foreign institutional investors only.
The Kuwait Stock Exchange is also another popular exchange in this region.
Generally speaking, there aren’t that many publicly-traded companies on these markets; but those few listed ones provide ample options for retail and professional traders alike.
Kuwait’s biggest stock exchange is the Kuwait Stock Exchange (KSE), established in December 1962.
The bourse has about 313 listed companies, and its capitalisation amounts to US$143 billion as of 2014.
Saudi Arabia features several stock exchanges operating in the country.
These include Tadawul, Saudi Arabia’s largest stock market, Ajman All-Share, the Abu Dhabi Investment Authority, and Dubai Financial Market (DFM).
Qatar stocks are mainly traded on one exchange – the Qatar Exchange (QE), formerly known as Doha Securities Market (DSM), until 2009.
There are no major stock exchanges here; only a handful of bank-sponsored public funds trade at Muscat Securities Market (MSM).
Tunisian stocks are primarily traded on the Tunis Stock Exchange (TND), one of Africa’s leading stock exchanges. It features about 42 public companies, and its capitalisation amounts to US$2 billion as of 2014.
Morocco has two major stock exchanges – the Casablanca Stock Exchange (CSE) and the Marrakech bourse, which Euronext has hosted since June 2012.
The Moroccan Exchange (MT) – sometimes referred to as BMCE Capital Markets because Banque Marocaine du Commerce Extérieur formerly owned it – closed in March 2007 due to lack of activity. Still, it reopened again five years later under new management.
Tunisian stocks are primarily traded on the Tunis Stock Exchange (TND), one of Africa’s leading stock exchanges. It features about 42 public companies, and its capitalization amounts to US$2 billion as of 2014.
The Egyptian Exchange (EGX), also known as Cairo Stock Exchange, has been operating for more than 100 years. It’s home to about 123 companies, and its capitalisation amounts to US$74 billion as of 2014.
There’s only one stock market in Libya – the Libyan Stock Exchange (LSE) based in Tripoli. The exchange was first opened to non-Libyan investors in May 2003 and became fully international three years later.
Recently, some foreign brokers had their license withdrawn due to specific regulations not being followed by them; but most are authorized now.
Sudan’s primary stock exchange is the Khartoum Stock Exchange (KSE). The bourse has a capitalization of US$1 billion as of 2014.
The Amman Financial Market (AFM) is Jordan’s biggest stock market. It features about 30 public companies, and its capitalisation amounts to US$600 million as of June 2013.Overall, the Mena region doesn’t have that many publicly traded companies; but those few listed ones provide ample options for retail and professional traders alike.