Market rules ready for Aramco listing ‘by end of June’

Saudi Aramco’s Khurais oil processing facility, 160 km east of the capital Riyadh. The Kingdom has been overhauling its stock market rules to prepare for the local listing of state-owned Aramco. (AFP)
Updated 30 March 2018
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Market rules ready for Aramco listing ‘by end of June’

NEW YORK: Saudi Arabia expects to unveil by the end of June rules to prevent large share price drops in newly-listed companies, the final regulatory step for the listing of oil giant Saudi Aramco, the head of the kingdom’s stock market regulator said.

The mechanism, known as price stabilization, is common on developed markets and allows underwriters of an initial public offering (IPO) to use some of the company’s stock to bolster its price, should it fall in the days after it starts trading, or the volume of shares changing hands is weak.

The Kingdom has been overhauling its stock market rules to prepare for the local listing of state-owned Aramco, which is hoping to raise $100 billion or more through a 5 percent stake sale later this year.

Saudi authorities have also said they want Aramco, whose IPO is billed as the world’s largest, to have an international listing, although no decision has been made on the location. This listing could be delayed until Aramco starts trading on the Tadawul, as the Saudi stock exchange is known.

The Capital Market Authority (CMA) issued updated rules in the last couple of months covering how securities are sold in the kingdom and how the offer price of an IPO is calculated using the bookbuild method, Mohammed El Kuwaiz, chairman of the market regulator, told a media event in New York late Wednesday.

“Once (the price stabilization guideline) is issued, we can then say that the Saudi market will be fully amenable to accommodate an offering of the size of Saudi Aramco, or indeed of any size,” he said.

Speaking to Reuters on the sidelines of the event, El Kuwaiz said drafting of the regulation was at “an advanced stage,” and it will be issued before the end of the first half of the year.

The CMA was also expecting to start work by the end of the year on rules governing dual-listings on the Saudi stock market that would be sent out for market feedback early in 2019, El Kuwaiz said.

The timetable could be brought forward if a company approached it wanting to list on another market, he added.


Fintech makes inroads in US banking market, but revenue share minimal — Accenture

Updated 44 min 52 sec ago
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Fintech makes inroads in US banking market, but revenue share minimal — Accenture

  • Around 19 percent of financial institutions in the US are new entrants, such as challenger banks, non-bank payments institutions and big tech companies
  • New entrants account for 63 percent of financial players in the UK

NEW YORK: Financial technology startups and other new entrants are making inroads in the US banking market, but have yet to capture a threatening share of bank revenues, according to research published by Accenture on Wednesday.
Around 19 percent of financial institutions in the US are new entrants, such as challenger banks, non-bank payments institutions and big tech companies, according to the report. Yet they have amassed only 3.5 percent of the total $1.04 trillion in banking and payment revenues so-far, Accenture found.
In the UK, new entrants have made a larger dent, having captured 14 percent of the total €206 billion ($238.45 billion) in industry revenues, with the majority going to non-bank payments companies, according to the report.
Accenture assessed more than 20,000 banking and payments institutions across seven markets around the world to determine the level of change that digital technologies have brought about in banking.
Since the financial downturn, a growing number of companies across the world have sought to position themselves as cheaper and more user-friendly alternatives to banks by making better use of new technology.
Banking and payments institutions have decreased by nearly 20 percent from 2005 to 2017. Still, one in six current institutions is what Accenture considers a new entrant, or companies that have entered the market since 2005.
Their impact has varied by geography.
Tougher regulations and greater dominance of large banks have made the US a more difficult market for new entrants in areas excluding payments, Alan McIntyre, head of Accenture’s global banking practice, said in an interview.
“You still have a very robust banking market in the US,” McIntyre said.
More than half of new current accounts opened in the United States have been captured by three large banks, which have had more money to invest in digital than smaller regional players, he added.
In the UK the situation has been different, thanks in part to a push from regulators aimed at fostering greater competition in the financial sector and diminishing the dominance of large banks.
New entrants account for 63 percent of financial players in the UK, according to the report.
The report also found new entrants are taking over one third of new revenue, pointing to their potential to pose a greater competitive threat going forward.
In Europe, including the UK, 20 percent of banking and payments institutions are new entrants and have captured nearly 7 percent of total banking revenues, according to the report.