Tadawul launches new derivatives market and clearinghouse leveraging Nasdaq’s market technology

By Edil Corneille

The Saudi Stock Exchange (Tadawul) has officially launched its first Derivatives Market and a clearinghouse, The Securities Clearing Centre Company (Muqassa), both of which are running on Nasdaq’s market technology. The first exchange-traded derivatives product is MT30 Index Futures, an index futures contract based on the MSCI Tadawul 30 Index (MT30), which will benefit from central counterparty clearing by Muqassa.

The new offering is said to provide regional and international investors with necessary hedging tools to manage risk and to expand exposure opportunities to the Saudi market. As the market infrastructure develops, Tadawul plans to roll out more derivatives products such as Single Stock Futures, Single Stock Options, and Index Options.

Eng. Khalid Alhussan, Tadawul’s CEO enunciated, “This is a significant step in introducing sophisticated market products and creating a trading environment that is attractive to local as well as international investors.” He added, “The launch of Derivatives Market will provide investors with hedging tools to more effectively manage risk and gives expanded opportunities to gain exposure to the Saudi capital market, the largest and most liquid market in the region.”

The launch of the derivatives market in Saudi Arabia is said to be one of the Financial Sector Development Program’s (FSDP) key initiatives under the Saudi Vision 2030. It marks a significant step in introducing sophisticated market products and creating a trading environment attractive to local as well as international hedgers and traders.

Lars Ottersgård, Executive Vice President and Head of Market Technology, Nasdaq stated, “Tadawul has been resolute in its ambitions to transform its market infrastructure in order to have world-class technology that meets and exceeds today’s demands and the new challenges of tomorrow.” He enthused, “We are pleased to celebrate the launch of Tadawul’s new derivatives market and CCP, as well as further extending our technology relationship. Nasdaq is fully committed to supporting Tadawul through this important transformation.”

Nasdaq’s market technology powers more than 250 of the world’s market infrastructure organisations and market participants, including broker-dealers, exchanges, clearinghouses, central securities depositories, and regulators, in over 50 countries with end-to-end, mission-critical technology solutions.

In August, Nasdaq and Dubai Gold & Commodities Exchange (DGCX) announced a market technology agreement that entails the provision of a full suite of integrated marketplace solutions by Nasdaq for DGCX. The solutions include multi-asset trading and real-time clearing capabilities, pre-trade risk management, as well as market intelligence, market surveillance, and quality assurance applications.