ClearStream, the post-trading services provider for the German Stock Exchange Group, will start linking the Saudi Stock Exchange to its network by linking with the Securities Depository Center Company (Edaa), wholly owned by the Saudi Tadawul Group and responsible for operating and maintaining the deposit and settlement system.
It is worth noting that ClearStream is the first international depository center that allows international investors to trade in the Saudi stock market as of June 14, 2021, through an indirect link through HSBC Saudi Arabia, which will provide the services of a local custodian of securities to the center. Clear Stream. This link will facilitate the entry of international investors to the Saudi financial market, by providing settlement of non-convertible government and private bonds and ETFs listed on the Saudi market and denominated in Saudi riyals.
Eligible ClearStream clients can invest in the Sukuk market, bonds and ETFs listed on the Saudi Stock Exchange without the need to submit an application for qualification as a qualified foreign investor, in addition to the possibility of using their existing accounts registered with ClearStream. For the first time, international investors can own Saudi fixed income securities and ETFs through the joint foreign candidate account, and they can also benefit from the services of well-known international depository centers, including the internal settlement service. As a result, the demand for government bonds from international investors is expected to increase and thus enhance the level of liquidity in the local market.
This linkage comes after the issuance of the approval of the Capital Market Authority to approve the instructions of the International Depository Centers (ICSDs), which aims to provide an appropriate regulatory environment for international depository centers to link with “Edaa” in line with international best practices, which helps to increase the efficiency and attractiveness of the Saudi financial market. And strengthening the Kingdom’s position and weight at the global level among the G20 countries.
On this occasion, Jan Williams said; Head of Global Markets at ClearStream: “The Saudi Stock Exchange is witnessing great attraction and increasing interest from international investors. We are pleased to provide our clients with access to a broad base of partners that have a strong presence in the Kingdom. Adding the Saudi Stock Exchange to our network is Evidence of ClearStream’s commitment to supporting emerging financial markets to integrate into the global financial system, and to generate more investment opportunities backed by our reliable and high-quality services.”
On his part, Raed Al-Hamid said; Edaa CEO: “We are keen to partner with ClearStream, a leader in the field of post-trading services, as we seek to establish strong links with international depository centers to provide advanced services to market participants. Linking Edaa to the ClearStream International Depository Center » As a result of our efforts to facilitate international investors’ access to the Saudi market and build more bridges of communication between local issuers and international investors, especially with regard to debt instruments listed on the Saudi Tadawul, in line with the objectives of the Financial Sector Development Program, which is one of the leading programs of the Kingdom’s 2030 vision.
During the previous years, the Saudi financial market witnessed a noticeable increase in the demand for Saudi listed sukuk and bonds by foreign investors, as the total value of issuances exceeded 106 billion US dollars in the first quarter of 2021, to keep pace with the high global demand for government issuances.
It is worth noting that the Saudi stock market is the largest financial market in the Gulf Cooperation Council (GCC) countries, and is ranked among the top 10 financial markets in the world and among the three largest emerging financial markets in terms of a combined market value of more than 2.5 trillion US dollars.