Saudi Tadawul launched the single stock futures contracts, to be the second financial derivatives product to be traded in the stock market.
According to Arabiya Net, 10 companies were chosen to trade future contracts on them, namely Al-Rajhi Bank, Saudi Aramco, Saudi National Bank, Alinma Bank, SABIC, STC, Saudi Kayan, Saudi Electricity Company, Almarai, and Maaden.
Single stock futures contracts will enable local and international investors to hedge and manage their portfolio risks more efficiently, as well as diversify the products available for trading in the Saudi stock market.
The shares that the single share futures contracts as their primary asset were selected from the largest and most liquid listed companies in the Saudi Tadawul, based on a list of criteria aimed at ensuring the availability of liquidity to meet market requirements, maintain market integrity, and enable effective management of investment portfolios. /p>
It is noteworthy that the Saudi Tadawul launched the financial derivatives market in 2020, and seeks to offer other financial derivative products, including options contracts for single shares. Which will be cleared by Muqassa Securities Clearing Center Company.
And the CEO of Saudi Tadawul, Muhammad Al-Rumaih, had said earlier during an interview with Al-Arabiya, that starting from Monday, July 4, 2022, trading on single share contracts will begin in the Saudi market, which was launched for 10 companies.
Al-Rumaih added that trading on single stock contracts will be half an hour before the opening of the market, and the closing will be half an hour after the market closes, and this is the nature of future contracts to give direction to the movement of the stock.
He explained that the launch of the second phase aims to deepen the market and confirm the commitment to providing new tools to investors in order to manage their risks efficiently.
And he indicated that each company will have 4 contracts, which represent the current month, the next month, the next quarter and the current quarter.
Wasim Jumaa, head of investment at Capital Investments, considered that the launch of the Saudi Tadawul, today, Monday, the future contracts for single shares, is a very important development, noting that the availability of options will open a wider field, and therefore there will be tools to manage risks in the Saudi market.
Gomaa added in an interview with Al Arabiya, that this helps the portfolio manager in adjusting the structure of his portfolio, as he can develop a long and short-term strategy, meaning that he can sell short through options or sell futures contracts, and at the same time it is in the long term.
He explained that this increases liquidity in the market, because the options have been expanded, and the methods of dealing for portfolio managers have also expanded.
