Tadawul hires Nasdaq for tech ‘transformation’

Nasdaq will deliver new cash and derivatives clearing systems to the Saudi Stock Exchange. (Reuters)
Updated 04 December 2017

Tadawul hires Nasdaq for tech ‘transformation’

DUBAI: The Saudi Stock Exchange has taken a major step toward transforming its financial infrastructure after signing a deal with Nasdaq, the US market based in New York.
Tadawul, the Riyadh-based market, on Monday announced an agreement with the US group to upgrade its post-trade technology, including registry, depository and risk-management systems, to be completed by the second half of 2020.
Nasdaq will deliver new cash and derivatives clearing systems, in a bid to bring the Riyadh exchange into line with global best practice in securities trading, according to a joint statement about the planned “transformation” at the Tadawul.
“We are very keen on investing in cutting-edge technologies to offer a fast and efficient post trade platform,” said Tadawul CEO Khalid Abdullah Al-Hussan.
“This crucial step goes hand in hand with all the market enhancements we have undertaken to integrate securities trading in Saudi Arabia with global equity markets and enhance post-trade infrastructure and efficiency for local and foreign investors.”
Tadawul has embarked on a strategy to modernize the infrastructure of the Arabian Gulf’s biggest stock market to enable it to handle the big economic changes planned under the Kingdom’s Vision 2030 strategy.
Proposed sales include the $100 billion initial public offering (IPO) of shares in the national oil champion Saudi Aramco, and a $200 billion sell-off of state-owned companies ranging from power generators to football clubs. At the Future Investment Initiative in Riyadh in October, Al-Hussan said he was confident Tadawul could list the Aramco IPO “exclusively” in Saudi Arabia.
Earlier this year, Tadawul announced major changes to its share trading regime, moving to the “T+2” settlement cycle used in most of the world, allowing foreign financial institutions to own shares directly in the Kingdom, and enabling “short selling” of shares.
Adena Friedman, president and chief executive of Nasdaq, said: “The ambition of Tadawul to become an innovative, world-leading exchange company is not only admirable but inspiring to our industry. By addressing the demand to overhaul, modernize and evolve its post-trade infrastructure, this demonstrates a clear vision by Tadawul to attract capital — both domestic and foreign — and present Riyadh as a major financial destination with best-in-class technology operating at its core. As a long-term partner, we are proud to be supporting Tadawul in their ambitious efforts and incredibly bright future.”
Securities industry experts welcomed the Tadawul-Nasdaq deal. Jeff Singer, former chief executive of Nasdaq Dubai and now a lecturer in business at the American University of Sharjah, said: “It’s a pretty big shift. They’ll need help from the experts at Nasdaq to reach their goal of looking like an international stock exchange. They will certainly need this kind of trading infrastructure to handle the volumes expected in the Aramco IPO and the rest of the privatization program.”
Oliver Schutzmann, chief executive of regional investor relations firm Iridium, said: “It’s good the Tadawul is getting ready for the investor revolution that is coming. The post-trade infrastructure is crucial for investors, long after the excitement of an IPO has faded.”
The new post-trade technology will replace Tadawul’s current systems, which were implemented in 2001.
In addition to introducing a new central counter-party clearing process, this transformation will enable both Tadawul and market participants to introduce new asset classes to the market and offer new services to the investors.
“These changes will increase efficiency, effectiveness and further growth of the market, supported by a modern flexible and efficient technology that reduces risks in the post-trade area in compliance with international best practices and standards,” Tadawul said in a statement. The deal also suggests that, in the debate over where the Aramco IPO should be listed in addition to Tadawul, Nasdaq has not given up hope in the face of competition from its rival New York Stock Exchange, as well as bourses in Hong Kong and London.
Some of the biggest companies in the world, including Apple, Microsoft, Facebook and Google owner Alphabet are listed on Nasdaq, though most big oil companies are listed on NYSE.
President Donald Trump hinted last month at ongoing interest by Nasdaq in the Aramco listing when he told journalists on board Air Force One: “I want (Aramco) to very strongly consider the New York Stock Exchange or Nasdaq or frankly anybody else located in (the US).”


Africa development bank says risks to continent’s growth ‘increasing by the day’

Updated 18 August 2019

Africa development bank says risks to continent’s growth ‘increasing by the day’

  • The trade dispute between US and China has roiled global markets and unnerved investors
  • African nations need to boost trade with each other to cushion the impact of external shocks

DAR ES SALAAM: The US-China trade war and uncertainty over Brexit pose risks to Africa’s economic prospects that are “increasing by the day,” the head of the African Development Bank (AfDB) told Reuters.
The trade dispute between the world’s two largest economies has roiled global markets and unnerved investors as it stretches into its second year with no end in sight.
Britain, meanwhile, appears to be on course to leave the European Union on Oct. 31 without a transition deal, which economists fear could severely disrupt trade flows.
Akinwumi Adesina, president of the AfDB, said the bank could review its economic growth projection for Africa — of 4 percent in 2019 and 4.1 percent in 2020 — if global external shocks accelerate.
“We normally revise this depending on global external shocks that could slowdown global growth and these issues are increasing by the day,” Adesina told Reuters late on Saturday on the sidelines of the Southern African Development Community meeting in Tanzania’s commercial capital Dar es Salaam.
“You have Brexit, you also have the recent challenges between Pakistan and India that have flared off there, plus you have the trade war between the United States and China. All these things can combine to slow global growth, with implications for African countries.”
The bank chief said African nations need to boost trade with each other and add value to agricultural produce to cushion the impact of external shocks.
“I think the trade war has significantly impacted economic growth prospects in China and therefore import demand from China has fallen significantly and so demand for products and raw materials from Africa will only fall even further,” he said.
“It will also have another effect with regard to China’s own outward-bound investments on the continent,” he added, saying these could also affect official development assistance.
Adesina said a continental free-trade zone launched last month, the African Continental Free Trade Area, could help speed up economic growth and development, but African nations needed to remove non-tariff barriers to boost trade.
“The countries that have always been facing lower volatilities have always been the ones that do a lot more in terms of regional trade and do not rely on exports of raw materials,” Adesina said.
“The challenges cannot be solved unless all the barriers come down. Free mobility of labor, free mobility of capital and free mobility of people.”