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).”

Germany: US calling European cars a threat is ‘frightening’

Updated 16 February 2019

Germany: US calling European cars a threat is ‘frightening’

  • ‘If these cars ... suddenly spell a threat to US national security, then that is frightening to us’

MUNICH, Germany: German Chancellor Angela Merkel on Saturday labelled as “frightening” tough US trade rhetoric planning to declare European car imports a national security threat.

“If these cars... suddenly spell a threat to US national security, then that is frightening to us,” she said.

Merkel pointed out that the biggest car plant of German luxury brand BMW was not in Bavaria but in South Carolina, from where it exports vehicles to China.

“All I can say is it would be good if we could resume proper talks with one another,” she said at the Munich Security Conference.

“Then we will find a solution.”

A US Commerce Department report has concluded that auto imports threaten national security, setting the stage for possible tariffs by the White House, two people familiar with the matter said Thursday.

The investigation, ordered by President Donald Trump in May, is “positive” with respect to the central question of whether the imports “impair” US national security, said a European auto industry source.

“It’s going to say that auto imports are a threat to national security,” said an official with another auto company.

The report, which is expected to be delivered to the White House by a Sunday deadline, has been seen as a major risk for foreign automakers.

Trump has threatened to slap 25 percent duties on European autos, especially targeting Germany, which he says has harmed the American car industry.

After receiving the report, the US president will have 90 days to decide whether to move ahead with tariffs.

Trump in July reached a trade truce with European Commission President Jean-Claude Juncker, with the two pledging no new tariffs while the negotiations continued.

Brussels has already drawn up a list of €20 billion ($22.6 billion) in US exports for retaliatory tariffs should Washington press ahead, the commission’s Director-General for Trade Jean-Luc Demarty told the European Parliament last month.

The White House has used the national security argument — saying that undermining the American manufacturing base impairs military readiness, among other claims — to impose steep tariffs on steel and aluminum imports, drawing instant retaliation from the EU, Canada, Mexico and China.

Trading partners have sometimes reacted with outrage at the suggestion their exports posed a threat to US national security.