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Derivatives and options trading would open up more options for investors, domestic and foreign. A full basket of such tradeable products will be in place by 2022. Image Credit: Reuters

Riyadh: Trading in Saudi Arabia's first exchange-traded derivatives product would start on August 30, part of moves to make the equity market more attractive to foreign investors.

Tadawul said the Saudi Futures 30 (SF30) Index Futures Contract was based on the MSCI Tadawul 30 (MT30) Index, and would give investors hedging tools and more opportunities to gain exposure to the Saudi capital market. Tadawul CEO Khaled al Hussan said the product would make the Saudi stock market more attractive, especially to foreign investors.

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.

Options next

The Saudi bourse plans to launch other derivatives-related products, like options, and complete the whole system by the end of 2021 and start of 2022, said Wael Al Hazzani, CEO of the Securities Clearing Center Co.

Tadawul's Al Hussan told a virtual news conference the outbreak of the novel coronavirus had not significantly affected trading on the Saudi stock market, with volumes higher than last year. The benchmark stock index is down 12 per cent this year as the Saudi economy has been hurt by lockdowns imposed after the virus outbreak and a slump in oil prices.