The Saudi Stock Exchange (Tadawul) will introduce exchange-traded derivatives in the first half of 2019. Tadawul will launch an index futures contract based on the tradeable index jointly developed with MSCI. Saudi Arabia’s inclusion into the major emerging markets indices further validates the need for this market. Tadawul is planning to launch additional derivative products gradually as part of its strategy to diversify its product offering and provide more investment opportunities for market participants.
“The introduction of derivatives is part of the Vision 2030 Financial Sector Development Program. This reflects Tadawul’s ongoing commitment to create new opportunities for investors and to increase institutional investors’ participation in the Saudi market,” said Khalid Al Hussan, Chief Executive Officer of Tadawul.
He added: “With the Kingdom’s impending inclusion in major international indexes and the successful implementation of a wide array of enhancements to develop the market and align Saudi regulatory frameworks with global best practices, the launch of a derivatives market is the natural next step towards an advanced capital market. Derivatives enable efficient price discovery of our securities in the home market.”
The planned launch of a derivatives market in Saudi Arabia follows on recent significant market developments, including the commencement of the Central Counterparty Clearing House (“CCP”) to develop future clearing services, rolling out the T+2 settlement cycle, introducing securities borrowing and lending, as well as covered short-selling frameworks for the first time in the region.