Saudi Trade launches market-making framework to spice up liquidity By Reuters

© Reuters. FILE PHOTO: Saudi girl walks on the Saudi inventory market (Tadawul), in Riyadh, Saudi Arabia March 9, 2020. REUTERS/Ahmed Yosri/File Photograph

DUBAI (Reuters) – Saudi Arabia’s inventory change stated on Sunday it was launching a market-making framework for its inventory and derivatives markets to assist guarantee liquidity and lift price-determination effectivity.

Entities should be change members, derivatives change members or their purchasers to be market makers.

“Market Makers have to make sure the provision of liquidity for a listed safety by offering steady quotes all through market open session,” the Saudi Trade, also called Tadawul, stated.

“The Saudi Trade will monitor compliance with Market Maker obligations, and can present incentives to the Market Maker after obligations are met.”

Dubai, with which Riyadh has a deepening financial rivalry, introduced in November final yr a 2 billion-dirham market-maker fund to spice up buying and selling on the inventory market, with a objective of doubling its measurement to three trillion dirhams.

State-led IPO programmes in Saudi Arabia, Abu Dhabi and Dubai have helped fairness capital markets within the oil-rich Gulf, in sharp distinction to america and Europe, the place world banks have been trimming headcount in a deal-making drought.

Gulf issuers have raised about $16 billion by way of such listings this yr, accounting for about half of whole IPO proceeds from Europe, the Center East and Africa, Refinitiv knowledge exhibits.

Saudi oil large Aramco (TADAWUL:)’s base oil subsidiary Luberef expects to lift as much as 4.95 billion riyals ($1.32 billion) from its IPO if it costs on the prime of a spread introduced on Sunday.

Saudi Arabia’s Crown Prince Mohammed bin Salman stated in July that Saudi Arabia aimed for its inventory change to be among the many three largest on the planet, a part of a broad financial agenda to diversify the financial system away from oil.

As of October, Tadawul was the world’s ninth largest change by market capitalisation of listed firms at $2.86 trillion, simply forward of the London Inventory Trade, in line with Statista.