Abu Dhabi Securities Exchange agrees to tie-up with Saudi’s Tadawul

ADX will provide depository and other services for Saudi securities to drive dual-listings

Abu Dhabi Securities Exchange agreed to be the sole entity responsible for the clearing of securities on Saudi's Tadawul stock exchange. Reuters

Abu Dhabi Securities Exchange, the emirate’s stock exchange, agreed to be the sole entity responsible for clearing UAE securities traded in Saudi Arabia, as part of efforts to encourage the practice of dual-listing of stocks on regional exchanges.

ADX signed a memorandum of understanding with the Securities Depository Center Company (Edaa) in Saudi Arabia, which wholly owns the Tadawul stock exchange in the kingdom.

Under the deal, ADX will exclusively provide custody, registration, clearing and settlement services for UAE securities traded on the Tadawul, the parties said in a statement on Saturday.

The agreement is intended to “strengthen bilateral cooperation in the dual listing of securities in Saudi and UAE financial markets”, the statement added.

Dual listings can help attract capital from a broader range of markets and increase a publicly traded company’s visibility to a greater number of investors.

The number of Saudi investors in ADX stood at 147,412 at the end of 2018, of which 147 were institutional investors, according to ADX. Saudi investors accounted for a total trading value of Dh1.6 billion in 2018.

“The agreement will provide an attractive platform for Saudi, UAE and foreign investors alike, thanks to the stable and competitive investment environment in the region’s financial markets,” said Khalifa Salem Al Mansouri, chief executive of ADX.

The MoU allows for the exchange of information and data relating to stock exchange transactions between the Tadawul and ADX, and permits the transfer of securities and updating of securities ownership registers in each country, the two parties said.

ADX had previously signed an agreement with the Tadawul to increase mutual cooperation through the exchange of information and expertise. This latest deal is part of wider efforts to increase governance and transparency in the stock exchange listing process, and standardise operational and technical procedures.

“The partnership stems from our mutual commitment to facilitate depositary services between the Saudi and UAE financial markets, by providing all facilities to enable depository operations, preservation and maintenance of ownership registers between both parties,” added Mamdooh Al Sedairy, chief executive of Edaa.

The agreement is also part of cooperation efforts between the UAE and Saudi Arabia overseen by the Saudi-Emirati Coordination Council, a group of officials from the two countries formed last year.