Tadawul to implement new settlement cycle for listed securities on Sunday

RIYADH: The Saudi Stock Exchange, known as Tadawul, announced here on Thursday that it will implement the “T+2” settlement cycle for listed securities with effect from Sunday.

Speaking at a news conference held at the Tadawul Media Center, Khalid Abdullah Al-Hussan, chief executive of Tadawul, told reporters that it is being implemented as part of a strategy to support development of the capital market.

“This step further aligns the Saudi capital market with international standards, benefiting both domestic and foreign investors,” he said.

“We are continuing to implement new initiatives to diversify and enhance opportunities for investors. The T+2 settlement cycle will bring Tadawul’s trade settlement cycle into line with standard clearing and settlement practices in a number of developed markets,” he stressed.

Al-Hussan pointed out that this is a further step in the effort to realize the Vision 2030 plan to diversify the Kingdom’s reliance on oil and make its equity market more attractive to local and foreign investors.

Last year in May, Tadawul announced that it has obtained regulatory approval to amend the settlement cycle of listed securities in the equity market within two subsequent working days of the trade execution date.

Furthermore, Tadawul announced the publication of draft rules for the T+2 settlement cycle for public consultation, involving concerned and interested parties, along with the QFI Information Memorandum, which includes the existing structure and enhancements to the Saudi Capital Market.

The new settlement cycle will apply to transactions of securities listed in the market across all types — stocks, sukuk, bonds, exchange- traded funds ( ETFs), tradable rights, in addition to over- thecounter transactions ( OTC). This will in turn unify the settlement duration for all types of listed securities.

In regard to the T+2 settlement cycle’s impact on traders, Abdullah Al-Khalifah, chief of business development at the Securities Depository Center, said: “All types of securities’ transactions are completed after two business days following the transaction execution date. Traders will still have purchasing power directly upon executing transactions with no need to wait for completing the settlement of securities.”

The objective of the T+ 2 settlement cycle is to increase the level of asset safety for investors by providing enough time to verify transactions and deal with errors should they occur.