CMA approves return-swap products
Saudi Arabia’s Capital Markets Authority (CMA) has authorised Japanese investment bank Nomura to give international institutional investors access to the Saudi Stock Exchange (Tadawul).
Nomura is now offering investors total return-swap products, whereby participation securities (P-notes) can be issued to foreigners.
“It is a way to allow foreign investment into Saudi stocks by having a local house like Nomura, invest on behalf of international investors. Ownership remains with us, while the economic risks and benefits are passed onto the foreign investors,” says Khaled al-Khattaf, chief executive officer at Nomura Saudi Arabia.
Swap products have been available in Saudi Arabia for a few years and is one of the ways that international investors can gain access to the Tadawul, which is the region’s largest and most liquid bourse.
“This is a very good sign, it is a step towards allowing more opportunities for foreign investors until further development for foreign investment,” says Al-Khattaf.
The CMA is expected to open the Tadawul up to direct foreign investment soon, although it has yet to announce a date.
“The CMA is waiting for high-level approval. Most of the network and security work has been completed, so perhaps the market opening will happen over the next few weeks,” says Arindam Das, head of HSBC securities services for the Middle East and North Africa.