RIYADH: Investment banking firm Riyad Capital has received clearance from the Saudi Stock Exchange to conduct market-making activities on Saudi Basic Industries Corp. effective Aug. 16.
According to a statement to Tadawul, market-making obligations include a minimum 80 percent presence of orders, a minimum size of SR500,000 ($133,264) and a maximum spread of 0.30 percent.
Market making refers to providing liquidity to financial markets by facilitating the continuous buying and selling of securities.
The statement added that Riyad Capital will conduct market-making activities as defined in its regulations and procedures.
Last month, Riyad Capital partnered with the UAE’s BHM Capital to combine their market-making expertise.
This strategic collaboration aims to leverage their proficiency in enhancing liquidity and further strengthening the financial markets in the Gulf Cooperation Council region.
Both companies will combine their advanced trading technologies and expansive networks to offer efficient price discovery.
In July, Tadawul also approved Riyad Capital as a market maker for Al Rajhi Bank and Americana Restaurants International PLC.
Abdullah Alshwer, CEO of Riyad Capital, was quoted by Tadawul as saying that his company was pleased to be appointed as one of the first market makers on the Saudi Exchange for these two companies.
“As a leading investment company in Saudi Arabia, we are committed to providing liquidity and enhancing market efficiency for our clients.”
Market makers play a crucial role in providing liquidity to the market. Their constant presence ensures traders can easily buy or sell securities without waiting for a willing counterparty.
In 2022, Tadawul launched a market-making framework for its stock and derivatives markets to help ensure liquidity and raise price-determination efficiency.
Besides Riyad Capital, SNB Capital and Al Rajhi Capital are active market makers in the primary market.
According to the Arab Gulf States Institute in Washington, Tadawul uses the New York Stock Exchange’s Arca lead market maker program and 12 other market makers.