5683Saudi Arabia: New Financial District
- May 31, 2006Saudi Arabia to privatize bourse, set up financial district
Tue May 9, 2006
RIYADH (AFP) - Saudi Arabia announced plans to turn its stock market
into a shareholding company open to the private sector and to
establish the Middle East's largest financial district.
The move to privatize the bourse, announced by Capital Market
Authority (CMA) chairman Jammaz al-Suhaimi at an economic conference,
will help the stock market operate on more professional and
transparent bases and introduce new products and services, analysts said.
The stock exchange in oil-rich Saudi Arabia, the Arab world's largest
bourse by capital, currently operates on an interbank basis. It is run
by Tadawul, which is managed by the board of the CMA, a government
"The CMA is actively working on launching the Saudi Arabian Financial
Exchange (SAFX) ... (which) will become a private sector corporation
based on the leading-edge international model for exchanges," Suhaimi
"The exchange will have a mandate to develop a range of products and
services that are vital to the development of our capital markets and
the competitiveness of our securities industry," he said.
Procedures to "establish SAFX as a shareholding company will begin
soon," Suhaimi said, adding that the studies prepared by the CMA
envisaged "opening part of the company's shares to public subscription."
The exchange will be run by the private sector as stipulated in the
Capital Market Law, financial analyst Nabil al-Mubarak said.
This will help the bourse operate on more professional and transparent
bases, he told AFP.
Tadawul general manager Abdullah al-Suweilmy said the move to
incorporate the stock exchange as a joint stock company would be
completed "very soon" although he did not put a time frame.
The change will give the stock market more independence, help
"introduce new products and services" and "address the needs of the
investors' base," he told AFP.
He said the decision, which is in line with CMA regulations, has been
in the works for several months and has nothing to do with the recent
heavy drop in the bourse.
Suhaimi and Saudi Finance Minister Ibrahim al-Assaf, who also
addressed the conference, announced that work would get under way
early next year to build "the Middle East's largest financial center"
The King Abdullah Financial District, named after the Saudi monarch,
"will be the Middle East's first financial district on a scale, and of
regulatory and technological standards, to match the major global
financial centers," a press statement said.
The district, which will house the stock exchange as well as banks and
other financial institutions, will take three years to build. It will
cover 1.6 million square meters (17.2 million square feet) and have
floor space of more than three million square meters (32.3 million
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