Saudi Stock Exchange to launch parallel market

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The Saudi Arabia Stock Exchange ‘Tadawul’ plans to launch a parallel market, named ‘Nomu’, on February 26, 2017. The move follows the announcement by Capital Market Authority (CMA) of issuing the Parallel Market Listing Rules which were published on December 22, 2016. The main objectives of establishing ‘Nomu’ is to tap into additional sources of funding and to intensify the diversification process and to deepen the capital market, the Saudi Press Agency (SPA) reported.

The launching of ‘Nomu’ is a step towards fulfilling Tadawul’s plans to further develop the capital market. It is also in alignment with the objectives of the 2030 Vision which stresses the importance of developing a more advanced capital market open to the world, allowing greater funding opportunities and stimulating economic growth. This will in turn generate more diverse investment opportunities and instruments for all capital market participants.

‘Nomu’  (Parallel Market) will open new investment possibilities for a wide range of companies including small and medium size enterprises (SMEs) which play a key role in leveraging the national economy and accelerating development. In light of this, potentially growing companies will benefit from listing in the capital market with less listing requirements compared to the main market in terms of market value, number of shareholders and offered shares’ percentages.

Moreover, ‘Nomu’ will enhance business growth for listed companies through diversifying financial resources of expansion plans, applying governance and disclosure standards and adopting best management practices. Ultimately, this will uplift a company’s profile, increase brand equity and market value and raise public interest in its offerings.

‘Qualified investors’

It is equally important to mention that, according to the Parallel Market Listing Rules, trading in ‘Nomu’ is limited to ‘qualified investors’. Furthermore, retail investors, who are not classified as qualified investors, can access ‘Nomu’ through investment funds with diversified investment strategies, which mitigate any risks of direct investment for individual investors.

The Saudi Stock Exchange (Tadawul) handles securities listing and trading operations. It also provides post-trade services, including depository services, registry services of listed and unlisted securities, Sukuk and bonds and ETF (exchange-traded fund), securities pledging, transfer of securities, Sukuk and bonds, and ETF ownership, securities, Sukuk and bonds and ETF ownership restriction and release, clearance and settlement related services, corporate actions, consolidated reporting and asset servicing and more for issuers, investors and members. In addition, the company offers over the counter trading for privately-placed Sukuk and bonds. It also offers market data services related to various trading activities on the multiple asset classes listed on Tadawul. The company was founded in 2007 and is based in Saudi Arabia’s capital, Riyadh.

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