Tadawul studies change in fluctuation limit, expects dual listing of foreign firms soon: Al-Rumaih

Mohammed Al-Rumaih CEO of Saudi Exchange (Tadawul)

The Saudi stock market is witnessing a strong and increasing turnout by all companies in all sectors to list their shares, with 18 listing requests approved through 2022. More listings are likely, based on corporate readiness, in coordination with the Capital Market Authority (CMA), Mohammed Al-Rumaih, CEO of the Saudi Exchange (Tadawul) said.

The market is studying to change fluctuation limit, but the decision is subject to discussion with financial institutions and the CMA’s approval, Al-Rumaih told Argaam in an exclusive interview, adding this will be studied, taking into account market, investor and corporate interest, ahead of gradual application.

Tadawul worked with financial institutions and the CMA on the market maker system, being one of the major developments which aims to enhance market efficiency and effectiveness through boosting liquidity.

The Saudi market is one of the best in terms of liquidity. However, this is not the same for all stocks. Some instruments have less liquidity than targeted by investors, Al-Rumaih explained, noting that the market maker will be a catalyst. It will reduce concerns when buying or selling stocks. The market maker should have certain obligations to abide by.

On the other hand, Al-Rumaih expected non-Saudi companies to obtain an approval soon for dual listing on Tadawul.

Developments in the sukuk and bonds market, as well as the debt market, aim to facilitate issuances. Companies need finance to expand in particular industries, the top official noted, noting that the capital market aims to be the first partner to provide finance for expansions.
 

The sukuk market has strong growth potential. A Tadawul committee worked on developing some mechanisms, mainly to facilitate going public, registration of bonds or sukuk, in addition to the direct listing of sukuk and bonds.

These developments will contribute to a gradual increase in the number of individual and institutional investors, which will in turn drive trading, Al-Rumaih elaborated.

Sukuk issuance requirements are simple, he said, explaining that the issuance size of publicly-listed companies should not be less than SAR 50 million. The issuance size of unlisted companies should not be less than SAR 100 million, while they are subject to the same requirements of equities.

Elsewhere, he said Tadawul is working on stock options. The main features are clear, and work is ongoing with the market regulator and financial institutions to introduce the best product, which is the most important in the derivatives market.

“Time is ripe now,” Al-Rumaih affirmed, pointing to the ready infrastructure and better knowledge of the derivates market. He expected this to be reflected on the main market.

On the other hand, Al-Rumaih added that the offering of REITs on Nomu-Parallel Market will help increase market diversification and give an opportunity to small-size funds to benefit from public listing to raise liquidity.