RIYADH, 27 October 2007 — Saudi Arabia is witnessing a new era in the development of technology in its stock exchange — a development that better serves the market, investors and traders.

The new system, which has been operating since last week at the Saudi Stock Exchange (Tadawul), is in full swing and has been welcomed by traders across the Kingdom, who believe that it is not only a dream come true for economic decision-makers, but also a means to tighten the noose on insider trading, ensure smooth transitions, allow larger volumes of trade and censure manipulators. The development is part of the continuation of growth in the Saudi Stock Exchange. Between 2004 and 2006, the World Federation of Exchanges ranked the Saudi market among the top 10 markets in the world in terms of volume, trade value and the number of participating investors.

The decision to upgrade the Saudi Stock Exchange to better facilitate more transactions and tighten regulations was taken in 2004 with the establishment of the Capital Market Authority (CMA).

“Looking at the ambitions of the CMA and the expansion of the market, it was realized that we needed to take the market to a newer stage,” Abdullah Al-Suweilmy, general manager of the Saudi Stock Exchange (Tadawul), told Arab News.

“It was realized that we needed to upgrade our technology. The decision was taken before the end of 2004 to proceed with the modernization of the technical infrastructure,” he added.

“Looking at the size of the change, the quality of the change, the features of the new system, I would call this the biggest development in the history of technology in the Capital Market of Saudi Arabia,” Al-Suweilmy said.

Key features of the new system include an expanded capacity, the ability to support other services and products, and the implementation of an advanced surveillance system.

“It by far exceeds our previous systems,” he said. “It enables us to support larger volumes of transactions, which we anticipate by the new member participants coming in, new listings and new IPOs.”

Al-Suweilmy said that on day one of operation, the Saudi Stock Exchange was able to support 2 million transactions a day and that the market is able to expand to support larger volumes.

“We should be able now to introduce new indexes in the market, trade products like bonds, mutual funds, etc. It also gives us additional capabilities when it comes to regulating the market,” he said.

Speaking about the advanced surveillance system, Al-Suweilmy said: “It is called SMARTS and it is becoming the de facto surveillance system in major exchanges around the world... It is the same system that was recently deployed on the London Stock Exchange..., Switzerland, Australia, Scandinavian countries.”

The system makes it easier for regulators and surveillance staff to get reports and analyses of trading activity, and pinpoint violations.

The official added that Tadawul’s contract with OMX, a Swedish company, which is the prime contractor implementing the new system, includes the training of a large number of staff, including Saudis. “We have a large team that was trained as part of the development phase of the project. All of them are Saudis, men and women, and they have been trained on the system,” he said. “We still have some of the most oversubscribed IPOs in Saudi Arabia,” said Al-Suweilmy while speaking about last year’s market crash.

He said the CMA was keen on educating investors on how to invest in the stock market. He also said banks and brokerage firms were very supportive of market awareness programs.

Tadawul was incorporated in March 2007 through a resolution issued by the Council of Ministers. Its articles of association allow for the public offering of its shares. It is a joint stock company with a capital of 1.2 billion riyals and is owned by the Public Investment Fund.

The Council of Ministers, headed by Custodian of the Two Holy Mosques King Abdullah, is expected to soon approve its new board.