Saudi Arabia signs major markets upgrade with Nasdaq

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Saudi Arabia has signed a deal with US group Nasdaq to upgrade the country’s financial markets infrastructure, another step towards its long-term goal of diversifying its economy.

The country’s stock exchange, the Tadawul, on Monday said it would use technology from the US group as the backbone for share trading. Nasdaq, which supplies trading technology to dozens of markets around the world, will replace Tadawul’s current registry, depository, clearing and settlement systems, which are more than 16 years old. The upgrade will be completed by 2020.

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Last year crown prince, Mohammed bin Salman launched an ambitious “Vision 2030” programme, which set out plans that Saudi Arabia would no longer dependent on oil revenues. For many big western investors keen to see

Saudi Arabia open up, the prize is to be able to start trading over-the-counter derivatives contracts in the kingdom, or derivatives market based on crude oil production. Eng. Khalid Abdullah Al-Hussan, chief executive of the Saudi Stock Exchange said deal was a “crucial step” and would “integrate securities trading in Saudi Arabia with global equity markets, and enhance post trade infrastructure and efficiency for local and foreign investors.”

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The exchange has already announced plans to reform its share settlement system, to bring it into line with international norms and make it easier for overseas institutions to invest. As part of the deal Nasdaq will rebuild the country’s central securities depository. The venue that settled trades is a registry and so does not have access to central bank money to settle trades.

Source Credit: Financial Times

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