A look at key enhancements to listing process in Saudi market

The Saudi Stock Exchange (Tadawul) and the Capital Market Authority (CMA) seek to facilitate the stock listing process, expand investors’ base and improve the related regulatory framework in line with the Financial Sector Development Program (FSDP), one of the Kingdom's Vision 2030 programs.

Earlier this year, CMA, the Saudi market regulator, widened the scope of the participating parties relevant to the book-building process, which will increase the pricing efficiency. The categories participating in the book-building process were expanded to include GCC investors of legal personality.

A number of restrictions related to determining the price range and the offering coverage have been eased. The mechanism of determining the subscription price has been revised, with the financial advisor, in coordination with the issuer, allowed to determine the subscription price, based on supply and demand.

In addition, regulations related to the share allocation were updated, with financial advisor, in coordination with the issuer, now entitled to allocate shares as it deems appropriate.

Tadawul has begun developing rules and provisions related to foreign listings, in conjunction with the Saudi market regulator, and signed several agreements with other stock exchanges to facilitate foreign listings, as well as linking the Saudi market with other regional markets.

Separately, the Securities Depository Center Company (Edaa) signed two agreements with Abu Dhabi Securities Exchange and Bahrain Clear to enable foreign companies to list on Tadawul and to unify administrative and technical procedures with both countries.

Tadawul is now allowing all foreign categories to directly invest in the foreign issuer’s listed shares, in line with the market listing rules.

As for the Nomu Parallel Market, enhancements included the direct listings; the auction IPO mechanism that will help inject fresh cash in stocks; new entrants can now opt either to float 20% of shares or SAR 30 million of capital directly for trading for 12 months; determining the regulations pertaining to the listing of the Nomu companies on Tadawul; turning quarterly financials into semi-annual statements; updating the minimum liquidity threshold; cutting the minimum threshold of share transactions, and introducing the Nomu Capped Index.

Other enhancements included listing close-ended funds and real estate investment trusts (REITs) on Nomu and setting up a new fund for research and analytical studies.