Saudi Stock Exchange

November 23, 2010Stock Exchangeby EconomyWatch

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The biggest in the Arab world with a market capitalization amounting to much more than $55 billion, the Saudi Stock Exchange has grown many fold since its inception in 1954. Better known as the "Tadawul," the Saudi Stock Exchange functions under the supervision of the Saudi Arabian Monetary Agency (SAMA).

Up to the mid 1980s the Saudi Stock Exchange or Tadawul which is by far the only Stock Exchange in Saudi Arabia, functioned informally. A Ministerial Committee was then finally constituted tooversee the development and regulation process of the Saudi Stock Exchange. This committee from then on has included the Governor of the Saudi Arabian Monetary Agency (SAMA) along with the Ministers of Finance and Commerce.

According to recent developments, the Saudi Stock Exchange is poised to be turned into a private sector company, integrating the national securities depository and be managed by a board to make the functioning of the stock market more transparent and to promote all round growth. This board will primarily be formed of nine members. Three from the erstwhile system, that is, the Governor of the Saudi Arabian Monetary Agency (SAMA) and the Ministers of Finance and Commerce. The remaining six will be from amongst the shareholders of the Saudi Stock Exchange.

Foreign investors were allowed entrance into the Saudi Stock Exchange through mutual funds, as late as 1997. Around 80 companies enlisted on the Saudi Stock Exchange trade shares publicly and this number is increasing by the day.

The trading of shares in the Saudi Stock Exchange is limited to the nationals of Saudi Arabia and people belonging to other member states of the Gulf Cooperation Council (GCC). People not belonging to the GCC member states can only invest through the open-end mutual funds put on offer by the Saudi banks.

The stock market index of the Saudi Stock Exchange, the Tadawul All-Share Index (TASI) is growing by leaps and bounds every fiscal year and the Saudi Stock Exchange is presently ranked 11th in the world in terms of market capitalization.

Trading, clearing, settlement and depository begun to be carried out through the electronic medium from the early 1990s onwards making the Saudi Stock Exchange the.