The Saudi Stock Exchange (Tadawul) intends to launch future contracts on individual stocks in order to increase liquidity.
According to Arabia Net, the trial launch will include 5 to 10 companies initially during the next few weeks, while more shares will be approved provided that certain criteria are met, according to sources with the agency. Bloomberg.
Tadawul did not respond to requests for comment.
This move will be the latest step towards increasing foreign investor participation in the market.
In September 2020, the CEO of Tadawul Group Holding Company, Khaled Al-Hussan, said the exchange plans to offer futures contracts in individual stocks. Meanwhile, index futures contracts began trading in Riyadh in August of that year.
Exchanges in the Gulf region are increasingly offering derivatives trading, with the Dubai Financial Market and Abu Dhabi Stock Exchange establishing stock futures markets.
Futures contracts differ from stock options, in that the options give the buyer the right to buy the asset at a fixed price without the obligation to continue buying, while the futures contract holder has the obligation to buy on the date futuristic.
