The Saudi Stock Exchange Company (Tadawul) recently announced a number of fundamental changes to the parallel market, with the aim of attracting new companies, after two years of the launch of the parallel market growth, in February 2017.

Tadawul said that these changes will be applied in two phases, the first of which will be in the first quarter of 2019, and the second in the second quarter of the same year.

She pointed out that the amendments come within the plan of the Capital Market Authority to support small and medium companies, which are considered a major tributary of the national economy.

The changes in the first stage include allowing companies to direct listing in the parallel market growth without subscription, and specifying a transition mechanism from the parallel market to the main market.

As for the changes in the second stage, it includes the inclusion of closed circulating mutual funds and real estate investment mutual funds (RITs) in the parallel market.

These changes come as part of a strategic plan to develop the parallel market and make it an attractive and more flexible platform, whether for companies wishing to be listed or for investors.

The parallel market witnessed a strong breakthrough growth on February 26, 2017, in light of the demand for investment on reduced terms, but the turnout did not last long.

The market witnessed a negative performance in the outcome after two years of its launch, fell to the level of 3,514 points, in the session of February 26, 2019, compared to 5000 points at the beginning of its launch, to lose about 30% of its value.

Tadawul had launched the parallel market growth, on more flexible terms compared to the main market, where listing in the parallel requires a market value of 10 million riyals as a minimum and the number of shareholders ranging between 35 - 50 shareholders on Least, with a subtraction of at least 20%.

It is allowed direct investment in the parallel market for institutions, and individuals who are eligible investors only, provided that several conditions are met, including that the investor has executed deals in the stock markets of not less than 40 million riyals, And that the size of his securities portfolio exceeds 10 million riyals.

Individuals can invest indirectly through investment funds or portfolios managed by persons authorized by the Capital Market Authority.