Tadawul to set up SAR 600 mln security clearing house

The Saudi Stock Exchange (Tadawul) has started work on establishing a Central Counterparty Clearing House (CCP), a SAR 600 million closed joint stock company for clearing of securities in the capital market.

The CCP will be fully operational by the second half of 2019, the bourse said in a statement on Wednesday.

It will be responsible for developing future clearing services in accordance with the best international risk management practices and standards.

An independent clearing house will help to diversify investment opportunities in the market by enabling the introduction of new asset classes such as derivatives and others that will allow investors to diversify their trading strategies, the statement added.

The CCP will also enable Saudi companies to hedge against risks, which will enhance the attractiveness of the capital market to all investors.

In addition, the new company will improve risk management of the market by introducing new mechanisms to ensure that the settlement is complete and that all parties meet their obligations when settling trades in the market.

“This will further strengthen the current market infrastructure and increase its operational efficiency,” said Tadawul.

Meanwhile, Wael Abdullah Al Hazzani was appointed as the new company's chief executive officer.