Al-Eqtisadiah from Riyadh
MSCI, the global provider of indicators, has signed an agreement with Saudi Stock Exchange (Tadawul) to develop a new trading index through which to develop various investment instruments such as ETFs and derivatives.
MSCI reclassified the Saudi stock market to an emerging market during the annual review in June and will be available in the fourth quarter of 2018.
Henry Fernandez, the Chairman and CEO of MSCI, said, "Over the past few years, Saudi Arabia has witnessed significant developments. This joint index is a result of the Saudi Stock Exchange's application of international standards and its desire to provide additional investment opportunities to international investors."
In addition, Khaled Al Hussan , Chief Executive Officer at Tadawul, said, "The establishment of this index provides a platform for the development of traded futures contracts and other products traded in the financial market. With the Saudi market joining global emerging market indices, including the MSCI Index, the launch of the Tadawul Index will help pave the way for ETFs and other products and allowing investors to scale up their dealings with greater diversification and risk management in parallel with enhancing overall market efficiency."
Saudi Stock Exchange (Tadawul) today announced its plan to launch the derivatives market in the first half of 2019 by launching " Index Futures Contracts." It will be based on the MSCI Index, which was announced today and will be launched in the fourth quarter of 2018. It plans to launch additional products in the derivatives market as part of its strategy to provide the best products and services to market participants.
Khalid Al Hussan, Chief Executive Officer of Saudi Stock Exchange (Tadawul) said, "The launch of derivatives is one of the initiatives of the financial sector development program within the vision of the Kingdom 2030. The launch reflects TADAWUL's commitment to developing new opportunities for investors and their efforts to increase institutional investors' participation in the Saudi financial market."
He added, "In line with the inclusion of the Saudi financial market in the global indices and developments that we have succeeded in achieving to enhance the performance of the market and the application of global best practices, the launch of the derivatives market is an important and complementary step to the development of the Saudi financial market. The derivatives market offers greater opportunities for investors to diversify their investments and manage related risks and enhance market efficiency and transparency. The launch of future ETFs will also expand opportunities for investors within the largest economy and largest financial market in the region."
The launch of the derivatives market in Saudi Arabia is an extension of the recent developments in the market including the establishment of an independent clearing house with a view to developing future clearing services, adjusting the time period for settlement of listed securities transactions (T + 2), and enabling lending and borrowing listed securities in addition to short selling.
