Saudi Exchange Launches Depositary Receipts for Global Share Trading
New financial instrument allows investors in Kingdom to trade shares of foreign companies listed on global markets.
Riyadh: Saudi Arabia has introduced a new financial instrument that enables investors within the Kingdom direct access to shares of foreign companies listed on global markets.
On July 7, the Saudi Exchange launched its first Saudi Depositary Receipts (SDRs), allowing international equities to be traded locally in Saudi riyals.
This marks the debut of depositary receipts in the Kingdom's financial market and is seen as a strategic move towards positioning Riyadh as a major global financial center, in alignment with the Financial Sector Development Program and broader Vision 2030 ambitions.
According to Tadawul, SDRs are highly liquid and flexible, facilitating issuers' transfer of securities between the Saudi financial market and foreign markets by converting SDRs into shares in the foreign market, thus enabling companies' shares to be traded on two different financial markets.
This development represents a broader strategic effort aimed at modernizing and globalizing Saudi Arabia's capital markets.
The introduction of SDRs builds upon the Kingdom's ongoing reforms aimed at enhancing market sophistication and accessibility, such as inclusion in global emerging market indices like MSCI, FTSE, and S&P Dow Jones, rollout of derivatives trading, simplification of Qualified Foreign Investor frameworks, and acceleration of sector-diverse IPO pipelines.
By bridging local and international investment landscapes, SDRs effectively bring Wall Street- or London-listed equities to Riyadh's trading screens.
A depositary receipt is a financial instrument that represents shares in a foreign company but is traded on a local exchange in the domestic currency.
In this case, Saudi investors can now gain exposure to foreign firms - including global technology giants, industrial leaders, and energy companies - without the need for opening a brokerage account abroad.
Unlike traditional cross-border investing, SDRs enable seamless trading, clearing, and settlement through Tadawul, all denominated in Saudi riyals.
This facilitates local investors' access to global markets through a familiar domestic platform, allowing them to trade using local brokers and remaining under the protection of Saudi Arabia's legal and regulatory framework.
On July 7, the Saudi Exchange launched its first Saudi Depositary Receipts (SDRs), allowing international equities to be traded locally in Saudi riyals.
This marks the debut of depositary receipts in the Kingdom's financial market and is seen as a strategic move towards positioning Riyadh as a major global financial center, in alignment with the Financial Sector Development Program and broader Vision 2030 ambitions.
According to Tadawul, SDRs are highly liquid and flexible, facilitating issuers' transfer of securities between the Saudi financial market and foreign markets by converting SDRs into shares in the foreign market, thus enabling companies' shares to be traded on two different financial markets.
This development represents a broader strategic effort aimed at modernizing and globalizing Saudi Arabia's capital markets.
The introduction of SDRs builds upon the Kingdom's ongoing reforms aimed at enhancing market sophistication and accessibility, such as inclusion in global emerging market indices like MSCI, FTSE, and S&P Dow Jones, rollout of derivatives trading, simplification of Qualified Foreign Investor frameworks, and acceleration of sector-diverse IPO pipelines.
By bridging local and international investment landscapes, SDRs effectively bring Wall Street- or London-listed equities to Riyadh's trading screens.
A depositary receipt is a financial instrument that represents shares in a foreign company but is traded on a local exchange in the domestic currency.
In this case, Saudi investors can now gain exposure to foreign firms - including global technology giants, industrial leaders, and energy companies - without the need for opening a brokerage account abroad.
Unlike traditional cross-border investing, SDRs enable seamless trading, clearing, and settlement through Tadawul, all denominated in Saudi riyals.
This facilitates local investors' access to global markets through a familiar domestic platform, allowing them to trade using local brokers and remaining under the protection of Saudi Arabia's legal and regulatory framework.
