Saudi bourse takes more steps to bolster emerging markets case

Saudi Arabia’s stock exchange is forging ahead with its effort to win emerging markets status this year, taking further steps to amend trading rules.

The Tadawul bourse will update its independent custody model and introduce measures to allow asset managers to aggregate orders of managed assets, it said in a statement on Wednesday.

It will also move to an auction method to determine closing prices and implement a market-making program aligned with global best practices

Already the biggest stock market in the Middle East, the Tadawul has been making reforms to strengthen its position as a gateway to the kingdom and is seeking to double its market capitalization in the next five years.

The government plans to create the world’s largest sovereign wealth fund and sell hundreds of state assets, including shares of oil giant Saudi Arabian Oil Co, known as Aramco, which could take place as early as this year.

“We have been very close to index providers as well as international providers,“ the Tadawul’s Chief Executive Officer Khalid Abdullah Al Hussan said in an interview on Wednesday.

“We have been very aggressive in the means of reaching international investors and educating them about these changes, making sure all changes are understood. I think things are moving on the right track. I see positive feedback from investors and international index providers.”

Last year, the Tadawul shifted its settlement cycle to T+2, introduced short-selling and started a parallel market with less stringent requirements for listing, among other changes. FTSE Russell will announce in March if it will add the country to its emerging markets category, and a decision is expected from MSCI Inc. in June.