DFM Plans To Adopt New Index Methodology During Q4 2022 #Dubai - Dubai City Guide
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DFM Plans To Adopt New Index Methodology During Q4 2022
(4 October 2022)


Dubai Financial Market (DFM) today announced that it is planning to adopt a new methodology for its DFM General Index, DFM Sharia Index, and DFM Sector indices, during the fourth quarter of 2022 (Q4 2022).

These indices are to be calculated by S&P Dow Jones Indices.

This step underscores DFM’s commitment to continuously developing its services in line with international best practices and to cater to investors’ growing appetite towards its investment opportunities. It also provides market participants with world-class investable benchmarks for the DFM equity market.

Key improvements and additions to the indices’ methodology include capping the threshold of a DFM index individual constituent at 10 percent of the index weightage instead of 20 percent currently, hence limiting the effect of limited number of companies on the index. The index calculation will be based on actual free float adjusted market capitalisation and quarterly rebalancing of the index replacing the current semiannual review.

The index methodology is governed by a DFM independent index committee that will supervise current and future methodology changes.

As part of the methodology changes, the DFM’s sectors will be aligned with the Global Industry Classification Standard (GICS) that are tracked by institutional clients. Going forward, the sectors will comprise seven sectors: Financials, Industrials, Real Estate, Utilities, Communication Services, Materials and Consumer Staples.

The DFM has opened a market consultation on the new index methodology which is available at www.dfm.ae/consultation. DFM aims to complete the consultation by 17th of October and launch the revised indices during the fourth quarter of 2022.

Hamed Ali, CEO of DFM and Nasdaq Dubai, said, “The improvement of the DFM indices underlines our commitment to further enhance our market services. This supports the strategic plan to develop Dubai’s financial markets by aligning our indices’ methodology and sector classifications with the international best practices. We are pleased to select S&P Dow Jones Indices, the world’s leading index provider, as our calculation agent to introduce reliable and transparent reference prices that support investment activities on DFM."

As the DFM’s calculation agent, S&P Dow Jones Indices will continuously provide the technical support to the calculation of the DFMs General Index, the Sectoral Indices, and the Sharia Index in line with the DFM index rules. The agreement between DFM and S&P Dow Jones Indices can facilitate an appropriate setting for the introduction of other index-related products in the future.

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