The Saudi Exchange is set to launch single stock options contracts in November, offering a valuable tool for local and global investors to effectively hedge and manage portfolio risks. These single stock options (SSOs) represent the third derivative product to be introduced on the Kingdom’s exchange, with trading commencing on November 27th, as announced by the exchange. Mohammed Al-Rumaih, the CEO of the Saudi Exchange, emphasized that the introduction of SSOs aligns with the exchange’s commitment to provide diversified investment opportunities and risk management tools, thereby enhancing market liquidity. The exchange is in line with international standards, with contracts being cleared and settled by the Securities Clearing Center Co. The initial SSOs will feature four underlying assets from prominent firms listed on the exchange, including Aramco, Al-Rajhi Bank, Saudi Telecom Co., and SABIC, with plans to expand to more companies in the future. Additionally, the Saudi Exchange is considering the introduction of physically settled American options, further enhancing the attractiveness of its equity markets to both local and international investors.
In recent years, the Saudi Exchange, also known as Tadawul, has been actively working to make its equity markets more appealing to foreign investors. In 2020, it launched the Kingdom’s first exchange-traded derivatives market and clearing house, offering the Saudi Futures 30 Index Futures Contract based on the MSCI Tadawul 30. This marked a significant step in introducing sophisticated market products and creating a trading environment that attracts a broader spectrum of investors. Furthermore, in 2019, the Saudi market joined the FTSE Emerging All Cap Index and the MSCI Emerging Markets Index, resulting in increased foreign fund inflows and positioning the exchange as a vital player in the global financial landscape.