As part of ambitious plans to develop the capital markets infrastructure in Saudi Arabia, the Saudi Stock Exchange (Tadawul) has recently issued proposed changes to legislation relating to short selling as well as securities borrowing and lending. Inclusion of Saudi Arabia in the MSCI indices, is driving the development of market infrastructure to provide investors with the opportunity to short sell securities listed in the kingdom.
This includes the provision of securities lending and borrowing services, with the latest draft regulation allowing non-Saudi agent banks to participate directly in this market. As this latest consultation closes shortly (8th July 2019), we await further refinement of these proposals with great interest.
Short selling plays an important role in capital markets by helping to provide more efficient price discovery and increasing market liquidity. It also facilitates hedging and other risk management activities, all of which are important elements in attracting international investor flows into local markets.
Click here to access the proposed new draft regulation for Securities Borrowing and Lending.
Click here to access the proposed new draft regulation for Short Selling.
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