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Tadawul set to begin new exchange system tomorrow

JEDDAH — The Saudi stock market, Tadawul, will begin implementing a new exchange system from tomorrow (October 20), according to the Capital Market Authority (CMA).

"We have carried out necessary tests to make sure it is working properly," said Dr Abdul Rahman Al Tuwaijeri, chairman of CMA.

He said new system is designed to accommodate about two million deals daily with prospects of increasing the capacity to meet future requirements.

Tadawul had signed an agreement with a specialised company last year to design and execute the new exchange system.

Custodian of the Two Holy Mosques King Abdullah bin Abdulaziz has already given the green signal to open up the Saudi stock market to foreign residents as part of efforts to increase its liquidity. Till now, expatriates were allowed to invest only in mutual funds.

King Abdullah's decision allowing foreign residents to invest directly in the market is expected to pump at least SR10 billion to the bourse, the largest in the Arab world. According to financial analysts, a large number of the country's six million expatriates are expected to join the market within the next three months.

The Capital Market Authority has already set out rules and regulations for the entry of expatriates in the market that include a ban on their participation in the initial public offerings (IPOs). However, the turnout of foreign residents at banks to open investment portfolios for Saudi stocks was very low, the first day that the government opened the market to them recently.

Bankers explained that at this stage expatriates would be making only inquiries about investment procedures without conducting any transactions. However, stock market experts have warned small and middle-income group people from rushing into investing in the stock market.