Tadawul, the Saudi Inventory Change, in the present day introduced a sequence of serious measures to enhance market entry and effectivity, improve liquidity, bolster investor safety, mitigate danger and additional align market practices with international greatest practices. Newly introduced measures embody:
- Updating the Unbiased Custody Mannequin (ICM) to reinforce Certified International Investor entry to the market by offering extra flexibility in buying and selling limits for ICM purchasers. Together with this alteration, a brand new procedures might be launched to mitigate credit score danger related to the settlement course of for all members
- Introducing a brand new elective mannequin to permit asset managers to mixture the orders of managed belongings (discretionary portfolios “DPs” and funding funds), assuring greatest execution and truthful allocation for his or her funds and purchasers;
- Transferring from a Quantity Weighted Common Worth (VWAP) to an public sale technique for figuring out closing costs for each the Predominant Market and Nomu parallel market ;
- Enhancing the opening worth public sale consistent with practices adopted by most different main markets;
- Implementing a Market Making (MM) Program primarily based on international greatest practices to reinforce liquidity, facilitate orderly worth formation, fortify the sukuk, bond and ETF markets and pave the way in which for ETPs and derivatives.
The adjustments to the ICM and introduction of the choice for Asset Managers to mixture orders are set to be carried out efficient January 21, 2018. The adjustments to the strategies for figuring out opening and shutting costs and introduction of the Market Making program are scheduled to be carried out by the second quarter of 2018.
The cumulative affect of those measures might be a extra environment friendly, liquid and safe marketplace for traders and intermediaries that’s additional aligned to worldwide greatest practices,” stated Khalid Abdullah Al Hussan, Chief Govt Officer of Tadawul. “This subsequent era of market enhancements builds on and augments the reforms already efficiently carried out by Tadawul in 2017 to enhance market perform, defend traders and additional consolidate Tadawul’s place because the main market within the area and a world funding vacation spot. These measures and reforms are making a extra enticing funding local weather for home and worldwide traders alike and have attracted greater than 100 main monetary establishments to open accounts within the Kingdom.
2017 was a groundbreaking 12 months for Tadawul, which, along side the Capital Market Authority (CMA), carried out far-ranging reforms, together with:
- Adoption of the IFRS accounting commonplace for all listed firms and the World Trade Classification Commonplace (GICS) in January 2017 to allow comparability of corporates throughout markets and simpler evaluation of sector efficiency;
- Opening of the home IPO market to QFIs as of January 2017;
- Adoption of recent company governance guidelines issued by CMA in February 2017 to reinforce the rights of shareholders and board members and promote better transparency;
- Launch of Nomu, a parallel fairness marketplace for Certified Buyers that gives lighter itemizing necessities and serves in its place platform for small and medium-sized enterprises to go public. Nomu was launched on February 26, 2017 and was opened to direct funding by non-resident overseas traders in January 1, 2018.
- Amending the settlement cycle to T+2 for all listed securities in April 2017 to extend the extent of asset security for traders and to unify settlement length with international requirements .
- Concurrent with implementation of T+2 settlement, introduction of a Supply versus Fee Mannequin (DvP), which ensures the supply of securities happens provided that the corresponding fee happens , and spin-off of the Securities Depository Middle (SDC), bringing the Saudi market consistent with most different main international markets.
- Introduction of securities borrowing and lending and coated short-selling to reinforce the convenience of buying and selling and create new alternatives for native and international market members. Tadawul is the primary market within the area to supply Securities Borrowing and Lending and coated brief promoting for all listed shares.
- Different vital measures included enhancements to the Market is the elimination of the money pre-funding requirement for institutional traders.