Tadawul

Tadawul trading, or investing on the Saudi Stock Exchange, leverages the largest stock exchange in the Middle East and North Africa (MENA) and one of the biggest in the world, particularly in terms of petroleum and natural gas companies. Owning shares of Saudi Arabian companies is highly restricted for foreign investors but there are other ways you can get involved in the market. Read on to learn about the Tadawul trading hours, history and how to trade on the Saudi Stock Exchange. We have also listed the top Tadawul brokers below.

History

The Saudi Stock Exchange began trading informally in 1954. The securities market became officially regulated in 1984 and, in 2003, the current regulator for the Saudi Stock Exchange, the Saudi Capital Markets Authority, was formed. By 2008, only residents of the Gulf Cooperation Council countries could own Saudi stocks directly, but in 2015, the Tadawul trading centre was opened to Qualified Foreign Investors (QFI). In 2017, the Saudi Stock Exchange adopted Nasdaq post-trading technologies. This new trading system opened the way for more complex products, like derivatives.tadawul trading group qatar

In 2019, Saudi Aramco, the largest oil producer in the world, launched its stocks on Tadawul in what was the world’s largest IPO at the time. Foreign issuers were then allowed to be listed on the Saudi Stock Exchange and Tadawul joined the FTSE Global Equity Index Series as a secondary emerging market. Saudi Aramco was the world’s largest listed company until 2020 when it was surpassed by Apple. The company’s listing on the Saudi Stock Exchange combined with more flexible rules for foreign investors has made the Tadawul trading centre one of the most relevant exchanges in the world.

In 2020, Tadawul had a daily average volume traded of 316 million shares and a daily average value of over 8,000 million Saudi Riyals (SAR). This is also the year that Tadawul launched its derivatives market.

Indices

Tadawul All-Share Index (TASI)

The TASI includes almost all the listed companies on the Saudi Stock Exchange, of which there are over 200, and can be used as a general indicator of its performance. There are 21 industry-related subindices, including the Energy Index, the Transportation Index and the Materials Index.

The only shares excluded from the TASI’s calculation methods are those owned by Saudi government officials, a company’s shares owned by its board of directors and restricted shares. You can follow the performance of this index on the Tadawul trading website or sites like Tradingview.

MSCI Tadawul 30 Index (MT30)

Launched in 2019, the MT30 index is used as a benchmark of the largest and most liquid companies listed on the Tadawul trading exchange. It was developed as a basis for derivatives and exchange-traded financial products.

Who Can Trade On The Saudi Stock Exchange?

The Saudi Stock Exchange has strict membership rules and restrictions on who can trade. Nationals and residents of countries in the Gulf Cooperation Council, which include Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates, can own, buy and sell stocks on the Tadawul trading centre if they have a Saudi bank account. Investors can also trade derivatives, bonds and exchange-traded funds (ETFs).

Foreign individuals that do not reside in these countries cannot directly trade stocks from Tadawul.

Foreign institutions can apply to the Qualified Foreign Investor (QFI) program and trade on the Saudi Stock Exchange. To qualify, a QFI needs to have at least $500 million in assets under management. There are over 1,500 financial institutions with QFI status, including banks, investment funds and brokerage firms. Foreign investors cannot own more than 10% of the shares of a listed company and a maximum of 49% of the shares of a listed company can be owned by QFI, collectively. Read the Tadawul trading and membership rules on its website for more information.

Tadawul trading clients are arranged into three groups: institutions, covering all institutional and corporate clients, as well as account managers; tier 1 individuals, including those traders that have large portfolios or professional securities experience or qualifications; tier 2 individuals, which covers everyone else.tadawul post trade technology program

What Products Are Available On The Saudi Stock Exchange?

  • Stocks: Investors can trade stocks of all companies listed on the Saudi Stock Exchange, subject to ownership restrictions for foreign investors.
  • Derivatives: Recently, the Tadawul trading exchange launched its first derivatives product, a future that tracks the MT30 Index. The clearinghouse, Muqassa, establishes the minimum percentage margin and the final margin levels depending on the client type, producing a calculated margin multiplier. Institutions have a multiplier of 100%, meaning they only pay the minimum margin; Tier 1 individuals have a multiplier of 133%, and Tier 2 individuals have a multiplier of 200%, so they pay double the minimum margin.
  • Exchange-Traded Funds (ETFs): ETFs are investment funds tracking a particular index or asset group and can be traded on stock exchanges. An ETF following the MT30 Index is available for all investors to trade, with no restrictions for foreign investors.
  • Negotiated Trades: With these instruments, a buyer and a seller agree independently on the trade details, including price and amount. There are volume and price minimums to regulate the market. Read the Tadawul Trading and Membership Procedures for more information.

Tadawul Trading Hours

The Saudi Stock Exchange opening hours are 10:00 to 15:00 AST (GMT+3) between Sunday and Thursday. Friday and Saturday are non-trading days. There is also an opening auction session from 09:30 until 10:00 AST, a trade-at-last session from 15:10 to 15:20 AST and a post-trade session from 15:10 until 16:00 AST on trading days. Tadawul trading hours are the same during Ramadan.

There are also Tadawul trading holidays on the National Day of Saudi Arabia (23rd September) and for a few days during the Eid Al-Fitr and Eid Al-Adha holidays. Check the trading calendar on the Saudi Stock Exchange website for more information on when trading holidays will occur.

How Can I Trade On The Saudi Stock Exchange?

To trade on Tadawul, you will need to open an account through a broker that is a member of the exchange. This applies to both the cash and derivatives markets and brokers that trade in one market might not necessarily work in the other oNot many international brokers offer access to the Saudi Stock Exchange, so check the Tadawul Member Directory for registered members. You can also find monthly data on the trading activity of each Tadawul trading member here, including their trade volume.

Here are some tips on what to look for in a broker for Tadawul trading:

  • Platforms: The best platforms for you to trade on Tadawul will depend on your expertise and strategy. Beginners might be more comfortable with an intuitive trading app and Tadawul intraday traders may also benefit from being able to trade from anywhere, anytime. More experienced traders on Tadawul might want an advanced platform with comprehensive analysis tools, like MetaTrader 4.
  • Accounts: Brokers will often offer different accounts according to your investment level, risk style and strategy. If you are a beginner, look for a broker that offers a demo account, where you will be able to virtual Tadawul trading. The exchange also offers free a trading simulator that you can use to practice new strategies.
  • Fees: Tadawul trading charges a fixed fee for trading in the form of a commission. Brokers will likely charge extra fees on top of this, including spreads, commissions and fixed fees for deposits and withdrawals. Compare the fee schemes of each broker to find the cheapest.

How Can I Trade On The Saudi Stock Exchange As A Foreign Individual?

If you do not meet the requirements to trade directly in the Saudi Stock Exchange, maybe you are not a national or resident of a Gulf Cooperation Council country, there are still ways to gain exposure to Saudi-listed companies. Foreign companies have developed indices that track the value of shares in the Saudi Stock Exchange and these derivatives on these indices can be traded on global exchanges.

The MSCI Saudi Arabia IMI 25/50 Index (USD) tracks 83 companies from the Tadawul trading centre and ETFs on its value and can be traded in the NYSE Arca Exchange (ticker: KSA) by individual investors from across the globe. The EUREX exchange offers the option to trade MSCI Saudi Arabia Index Futures (FMSA).saudi arabia stock exchange trading calendar

Final Word On Tadawul Trading

For residents of Gulf Cooperation Council countries, Tadawul trading offers exciting opportunities. Saudi Aramco, the largest oil producer in the world, put the Saudi Stock Exchange on the world map and, even if you are not a Gulf national, there are still ways to gain exposure to the Saudi market. Keep an eye on the developments of the Tadawul trading exchange as it plans to release new derivatives and indices. For a full list of top brokers to get started with the Saudi Stock Exchange, see here.

FAQs

What Is Tadawul?

The Tadawul trading centre, or the Saudi Stock Exchange, is the largest stock exchange in the Middle East and North Africa and one of the biggest in the world. Tadawul had an average daily trading volume of 316 million shares and value of over 8,000 million Saudi Riyals (SAR) in 2020.

What Stocks Are Traded On The Saudi Stock Exchange?

Some of the largest petroleum and natural gas companies in the world are listed on the Tadawul trading exchange. This includes Saudi Aramco, the largest oil producer in the world.

Who Can Trade On The Saudi Stock Exchange?

Nationals and residents in the Gulf Cooperation Council countries with a Saudi bank account can trade directly on the Tadawul trading exchange. Foreign institutions that meet the Qualified Foreign Investor program requirements am can trade, although there are limitations on ownership.

Can I Trade Derivatives In Tadawul?

Yes. The Tadawul trading centre recently launched a derivatives market. Currently, it offers an index future that tracks the MT30 Index. Foreign investors do not have ownership limits when trading derivatives.

What Are Tadawul Trading Hours?

The Saudi Stock Exchange is open from 10:00 to 15:00 AST, Sunday through Thursday. Out of hours, trading is supported from 09:30to 10:00 AST and from 15:10 to 16:00 AST. Tadawul trading hours are the same during Ramadan.

Can I Trade In The Saudi Stock Exchange From US?

Individual investors that are neither nationals or residents of the Gulf Cooperation Council countries cannot trade on the Saudi Stock Exchange directly. However, you can have exposure to the Saudi Stock Exchange by trading ETFs, futures and other derivatives on indices that track the share prices of Saudi-listed companies.

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