Saudi Arabia to privatize bourse, set up financial district

Saudi Arabia to privatize bourse, set up financial district

http://news.yahoo.com/s/afp/20060509/bs_afp/stockssaudimarket_060509194111

RIYADH (AFP) - Saudi Arabia announced plans to turn its stock market into a shareholding company open to the private sector and to establish the Middle East's largest financial district.

The move to privatize the bourse, announced by Capital Market Authority (CMA) chairman Jammaz al-Suhaimi at an economic conference, will help the stock market operate on more professional and transparent bases and introduce new products and services, analysts said.

The stock exchange in oil-rich Saudi Arabia, the Arab world's largest bourse by capital, currently operates on an interbank basis. It is run by Tadawul, which is managed by the board of the CMA, a government organization.

"The CMA is actively working on launching the Saudi Arabian Financial Exchange (SAFX) ... (which) will become a private sector corporation based on the leading-edge international model for exchanges," Suhaimi said.

"The exchange will have a mandate to develop a range of products and services that are vital to the development of our capital markets and the competitiveness of our securities industry," he said.

Procedures to "establish SAFX as a shareholding company will begin soon," Suhaimi said, adding that the studies prepared by the CMA envisaged "opening part of the company's shares to public subscription."

The exchange will be run by the private sector as stipulated in the Capital Market Law, financial analyst Nabil al-Mubarak said.

This will help the bourse operate on more professional and transparent bases, he told AFP.

Tadawul general manager Abdullah al-Suweilmy said the move to incorporate the stock exchange as a joint stock company would be completed "very soon" although he did not put a time frame.

The change will give the stock market more independence, help "introduce new products and services" and "address the needs of the investors' base," he told AFP.

He said the decision, which is in line with CMA regulations, has been in the works for several months and has nothing to do with the recent heavy drop in the bourse.

Suhaimi and Saudi Finance Minister Ibrahim al-Assaf, who also addressed the conference, announced that work would get under way early next year to build "the Middle East's largest financial center" in Riyadh.

The King Abdullah Financial District, named after the Saudi monarch, "will be the Middle East's first financial district on a scale, and of regulatory and technological standards, to match the major global financial centers," a press statement said.

The district, which will house the stock exchange as well as banks and other financial institutions, will take three years to build. It will cover 1.6 million square meters (17.2 million square feet) and have floor space of more than three million square meters (32.3 million square feet).

 

Dubai is fastly becoming the financial center of the entire Middle East...They're becoming the Hong Kong of the region.