By: Aseel bin Taleb
Riyadh – Mubasher: The approval by the Saudi Stock Exchange (Tadawul) for the "T+2" clearing mechanism to settle trades is a developmental step for the Saudi market that is in-line with the Kingdom's 2030 Vision, stated CEO Khalid AlHussan.
On Wednesday, Tadawul announced a new mechanism called "T+2" which aims to extend trade settlements to within two working days of execution instead of on the same day.
The mechanism is common in global and other emerging markets.
This change will enable Tadawul to protect investors better and attract bigger liquidity to the market, the top official highlighted.
"We are taking steps to link the Saudi market to global markets," he asserted.
Responding to Mubasher's question on the risks resulting from this decision, AlHussan said: "Any decision taken often has risks; however, amending the time frame for settling trading deals will the bourse to manage these risks better."
As for the date of implementing the new T+2 mechanism, AlHussan stated that the announcement will come in the second quarter of 2017.
This step comes ahead of the MSCI review, which will decide whether or not to review the Saudi market for inclusion in its emerging market index.
Translated by: Nada Adel Sobhi
