Saudi Exchange launches market-making framework

DUBAI: Saudi Arabia’s stock exchange said on Sunday it was launching a market-making framework for its stock and derivatives markets to help ensure liquidity and raise price-determination efficiency.

Entities must be exchange members, derivatives exchange members or their clients to be market makers.

“Market Makers have to ensure the availability of liquidity for a listed security by providing continuous quotes throughout market open session,” the Saudi Exchange, also known as Tadawul, said.

“The Saudi Exchange will monitor compliance with Market Maker obligations, and will provide incentives to the Market Maker ater obligations are met.”

Dubai, with which Riyadh has a deepening economic rivalry, announced in November last year a 2 billion-dirham market-maker fund to boost trading on the stock market, with a goal of doubling its size to 3 trillion dirhams.

State-led IPO programmes in Saudi Arabia,

Abu Dhabi and Dubai have helped equity capital markets in the oil-rich Gulf, in sharp contrast to the United States and Europe, where global banks have been trimming headcount in a dealmaking drought.

Gulf issuers have raised about $16 billion through such listings this year, accounting for about half of total IPO proceeds from Europe, the Middle East and Africa, Refinitiv data shows.

Saudi oil giant Aramco’s base oil subsidiary Luberef expects to raise up to 4.95 billion riyals ($1.32 billion) from its IPO if it prices at the top of a range announced on Sunday.

Saudi Arabia’s Crown Prince Mohammed bin Salman said in July that Saudi Arabia aimed for its stock exchange to be among the three biggest in the world, part of a broad economic agenda to diversify the economy away from oil.

As of October, Tadawul was the world’s ninth largest exchange by market capitalisation of listed companies at $2.86 trillion, just ahead of the London Stock Exchange, according to Statista.

Meanwhile, Saudi oil giant Aramco’s base oil subsidiary Luberef expects to raise up to 4.95 billion riyals ($1.32 billion) from its initial public offering, it said, if it prices at the top of a range announced on Sunday.

Luberef will sell nearly 30% of the company’s issued share capital, or 50.045 million shares, at between 91 and 99 riyals each, the company said in a statement.

State-led IPO programmes in Saudi Arabia, Abu Dhabianddubaihavehelpedequitycapitalmarkets in the oil-rich Gulf, in sharp contrast to the United States and Europe, where global banks have been trimming headcount in a dealmaking drought.

Gulf issuers have raised about $16 billion through such listings this year, accounting for about half of total IPO proceeds from Europe, the Middle East and Africa, Refinitiv data shows.

A minimum of 75% of the Luberef shares being sold will be offered to institutional investors, with bookbuilding geting underway on Sunday and running until Friday.

The final share price will be announced next Sunday, with subscriptions for individual investors running from Dec. 14 to Dec. 18. A date has not yet been set for shares to begin trading on Riyadh’s Tadawul exchange.

Aramco owns 70% of Luberef and Saudi investment bank Jadwa Investment the remaining 30%.

Saudi Aramco’s record listing in late 2019, later boosted to total $29.4 billion in proceeds, was the world’s largest IPO.

Aramco, which has raised billions from deals linked to its pipeline infrastructure, is also planning an IPO of its energy-trading business.

The kingdom’s privatisation programme is a cornerstone of its Vision 2030 economic agenda to wean the economy off oil, build new industries and create jobs.

Meanwhile, International delegates and global mining investors atending London’s Mines and Money conference have heard how Saudi Arabia is arguing that the energy transition from hydrocarbons to renewables is opening the path for it to become a global leader in the sustainable and innovative production of minerals and metals, especially since a vast, new and largely untapped minerals super-region is emerging, stretching from Africa to central Asia.

Khalid Al-mudaifer, Vice-minister for Mining Affairs, Ministry of Industry and Mineral Resources, in a keynote address at the event said that minerals are indispensable to the energy change to renewables:

“Decarbonization – the net-zero transition – cannot happen without minerals and metals: a lot of minerals and metals. We need to scale up discoveries and we need to scale up production. The World Bank says that by 2050 the production of minerals such as graphite, lithium, cobalt and copper needs to increase by nearly 500% to meet the future demand for clean energy technologies.”