Tadawul Hires Nasdaq to Lead Tech Transformation

Tadawul is getting a tech boost.

Last week, the Saudi stock exchange announced that it had entered into a deal with Nasdaq to upgrade its post-trade technology.

Nasdaq, the second-largest exchange in the world by market capitalization, will provide new cash and derivative clearing systems for Tadawul by the second half of 2020. The goal is to bring the Riyadh exchange up to par with the best security trading practices in the world.

“We are very keen on investing in cutting-edge technologies to offer a fast and efficient post-trade platform,” said Tadawul CEO Khalid Abdullah Al-Hussan on replacing a post-trade system that has been in place since 2001.

New post-trade technology not only makes trading faster and more efficient, but it also provides a more stable environment for the settlement of securities, handling administration, custody and risk management.

Like many other things, the modernization of the Arabian Gulf’s biggest stock market is vital to the success of the Kingdom’s vision 2030 plan.

With the proposed sales including $100 billion initial public offering of shares in the national oil champion Saudi Aramco and a $200 billion sell-off of state-owned companies ranging from solar power to football clubs, Saudi Arabia’s stock market had to be modernized to meet the pending demand.

Throughout this year, Tadawul made important announcements. Tadawul first announced it had successfully completed its transition to a “T+2” transaction settlement cycle in April, which is similar for most of the world. Tadawul also announced that it would allow foreign financial institutions to own shares directly in the Kingdom.

What This Means for Tadawul’s Future

Adena Friedman, president and chief executive officer of Nasdaq, said: “The ambition of Tadawul to become an innovative, world-leading exchange company is not only admirable but inspiring to our industry. By addressing the demand to overhaul, modernize and evolve its post-trade infrastructure, this demonstrates a clear vision by Tadawul to attract capital — both domestic and foreign — and present Riyadh as a major financial destination with best-in-class technology operating at its core.”

Oliver Schutzmann, chief executive of regional investor relations firm Iridium, said: “It’s good the Tadawul is getting ready for the investor revolution that is coming. The post-trade infrastructure is crucial for investors, long after the excitement of an IPO has faded.”

The current transformation will propel Tadawul forward, giving every participant more capabilities in the market like introducing new asset classes to the market.

“These changes will increase efficiency, effectiveness and further growth of the market, supported by a modern flexible and efficient technology that reduces risks in the post-trade area in compliance with international best practices and standards,” Tadawul said in a statement.

 

Read more at Arab News.