Tadawul to implement T+2 settlement cycle by H1-17

The Saudi Stock Exchange (Tadawul) has obtained the approval from the kingdom’s market regulator, the Capital Market Authority (CMA), to adopt a T+2 settlement cycle for share trading by the first half of 2017, allowing a two-day settlement period for transactions.

The bourse currently uses a T+0 settlement system; meaning trades are settled the same day.

Under the new system, Tadawul will cancel previous requirements for cash availability before purchases, while short-selling of shares will also be allowed, the CMA said in a statement on Tuesday.

Controls will also be strengthened to reduce market risk and protect investors’ assets, it added.

The settlement cycle was one of the top concerns highlighted by global indices provider MSCI with regards to Tadawul’s possible inclusion in its emerging markets index by next year.

Saudi Arabia is seeking to open up its $411 billion bourse further as part of a wider national strategy aimed at diversifying its economy away from oil.

Tadawul first opened up to foreign investors in June 2015.