Saudi Arabia's Tadawul Stock Exchange CEO Khalid Abdullah Al Hussan told Bloomberg TV that there are four to five IPOs under review at the moment. Image Credit: Reuters

Saudi Arabia's stock exchange plans to introduce futures contract in single stocks in the first half of next year, according to its chief executive officer.

The start of derivatives market will also help accelerate plans for an offering of shares in the bourse, Tadawul CEO Khalid Abdullah Al Hussan said in an interview to Bloomberg TV.

The lineup of initial public offerings (IPOs) on Saudi Arabia’s stock exchange remains "very healthy", despite the impact of the coronavirus, he said.

Currently, there are "four to five" IPOs under review, he told Bloomberg TV.

Retail investors are driving Saudi stocks at the moment, he said.

The average Tadawul trading volume increased by about three-fold amid the pandemic, with active participation of retail investors.

First Saudi exchange-traded derivatives market

On August 30, the Saudi Stock Exchange (TADAWUL) launched the kingdom’s first exchange-traded derivatives market and clearing house on Sunday, as part of its strategy to make its equity markets more attractive to foreign investors.

Using Nasdaq technology, the Saudi Futures 30 (SF30) Index Futures Contract is based on the MSCI Tadawul 30 (MT30), the first exchange-traded derivatives product.

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“This is a significant step in introducing sophisticated market products and creating a trading environment that is attractive to local as well as international investors,” said Tadawul CEO Khalid Alhussan.

In a separate statement it said Goldman Sachs Saudi Arabia has become a member of Tadawul with the right to conduct brokerage services for derivatives trading and to deal as a principal and as an agent for the new market launch.

Saudi authorities have introduced a raft of reforms to attract overseas share buyers and issuers as part of efforts to lure foreign capital and diversify the oil-dependent economy.

In 2019, the Saudi market joined the FTSE Emerging All Cap Index and the MSCI Emerging Markets Index, triggering more foreign fund inflows.

In July, Tadawul officials said the bourse plans to launch other derivatives-related products, such as options, and complete the whole system by around the end of 2021 or the start of 2022.