Daily Management Review

The Riyadh Exchange is switching to Nasdaq technologies


The Saudi Arabia Stock Exchange is hiring a group of American specialists from Nasdaq to replace the 16-year registration, depository and settlement infrastructure, as it is facing problems including the upcoming listing of Saudi Aramco.

bfishadow via flickr
bfishadow via flickr
The Kingdom is rapidly developing its stock market, which has a capitalization of about $ 450 billion, and intends to attract foreign capital, as the kingdom seeks to reduce the dependence of the economy on oil.

The government of Saudi Arabia is going to attract tens of billions of dollars after selling about 5% of the shares of the national oil giant Saudi Aramco in the second half of 2018, which may become the largest primary public offering (IPO) in the world.

Officials also want to start trading in government and corporate bonds, and in April they told Reuters that the exchange should be ready to trade in futures and stock options 24 months after the completion of reforms aimed at combating risks.

According to the Saudi stock exchange, Nasdaq technology, which should be installed by the end of 2020, will create a new centralized system of clearing counterparties for the market. Representatives of Riyadh did not disclose value of the agreement with Nasdaq.

The government said it intends to list Aramco shares in Riyadh and at least one external site, but the Saudi executive director said last month that he hopes to be an exceptional place to list and that he has done a tremendous job convincing Aramco of advantages of such a step.

Earlier it was reported that Saudi Aramco plans to sell up to 5% of the shares during the IPO next year. Aramco's IPO is part of Vision 2030, the plan of Crown Prince Mohammad bin Salman to diversify the economy, create the world's largest sovereign investment fund and reduce dependence on hydrocarbons.

In October 2017, Mohammad bin Salman said that the Aramco IPO, according to the plan, should be completed in 2018.

According to Nasser, a decision is yet to be made on how many shares of Saudi Arabian Oil Co. will be offered as part of an IPO and on which exchanges abroad will be posted, Bloomberg reports.

Earlier, Saudi Aramco reported that it will place its shares on the Saudi stock exchange Tadawul, as well as at one or two international sites.

In June, the Financial Times reported that lawyers warned Saudi Arabia about the risks of placing shares in New York. In August, Reuters reported that the Middle East kingdom is inclined to hold an IPO in New York, despite the risks.

source: ft.com

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