– The liaison agreement with Euroclear was signed at the Future Investment Initiative (FII) conference
Posted: October 27, 2021 at 8:18 a.m. EDT|Update: 19 minutes ago
RIYAD from Saudi Arabia and BRUSSELS, October 27, 2021 / PRNewswire / – that of Saudi Arabia Société du Center de Dépôt de Securities (Edaa) and Euroclear Bank, the Brussels International Central Securities Depository (ICSD), signed an agreement at the Future Investment Initiative (FII) conference to launch a fully Euroclearable link to allow international investors access to the local sukuk and bond market.
The link, which should be launched in March 2022, will provide international investors with an additional channel to access the sukuk and bond market within the Saudi stock exchange, the largest in the Gulf Cooperation Council (GCC) region among the largest exchanges in the world and one of the three largest emerging market exchanges with a market capitalization of over US $ 2.5 trillion.
International investors will be able to settle locally issued bonds through a direct agent account at Edaa using their existing Euroclear accounts. This will follow improvements to Saudi Tadawul Group’s market infrastructure, including an improved framework for delivery against payment (DvP) in the primary and secondary market. The link, which will allow greater interoperability within the market, is particularly timely given the recent announcement of the Saudi Arabia inclusion in the FTSE Russell Emerging Markets Government Bond Index (EMGBI).
Euroclear’s eligible international investors will benefit from a range of services including internal settlement, trading and safekeeping of Saudi government and quasi-government bonds listed on the Saudi Stock Exchange, without the need to apply for QFI status. Ultimately, eligible investors will also be able to use these Sukuk and Bonds as collateral for financing activities, including repo and pledging transactions via Euroclear’s open Collateral Highway.
Raed Alhumaid, CEO of Edaa, said: “We are delighted to partner with Euroclear, an international central securities depository, which allows us to expand our international reach in the Saudi capital market, and in turn enhance the diversity of the investor base on market and increase its efficiency. is one of Edaa’s milestones in continued efforts to advance the Saudi capital market and its infrastructure, in line with the Kingdom’s Vision 2030, as we aim to amplify our reach by creating more channels for investors international organizations to effectively access the sukuk and bond market. “
Lieve Mostrey, CEO of Euroclear The group said: “We are extremely pleased to be able to bring the scale and robustness of our infrastructure to the Saudi capital market. By becoming Euroclearable, this G20 market will be directly exposed to a broader international investor base, which will translate into improved liquidity and costs. This achievement is the result of a lot of hard work and diligent attention from everyone involved as we continue to expand our global service for our customers.“
In recent years, the Saudi capital market has seen increased demand from international investors for Sukuk and Saudi-listed bonds as the market’s issuance exceeded the SAR. 451 billion dollars, with increasing global demand for government issues.
The Securities Depository Center Company (“Edaa”) was established in 2016 and is 100% owned by the Saudi Tadawul group. “Edaa” operates and manages the Deposit and Settlement System (DSS) to register and hold securities and register ownership of securities on the Saudi Stock Exchange. It aims to improve the efficiency of securities depository and registration services, in line with the goals of Saudi Vision 2030, by developing a smarter environment that fosters excellence in all sectors related to the capital market. For more information visit: www.edaa.com.sa
The Euroclear Group is the trusted provider of post-trade services to the financial industry. Euroclear provides national and cross-border securities settlement and custody for bonds, equities and derivatives to investment funds. Euroclear is a proven and resilient capital market infrastructure committed to providing risk mitigation, automation and efficiency at scale for its global client franchise.
The Euroclear group includes Euroclear Bank, CSD International, as well as Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear UK & International. The Euroclear group settled the equivalent of 897 trillion euros securities transactions in 2020, representing 276 million national and cross-border transactions, and held 32.8 trillion euros assets for clients by the end of 2020. For more information on Euroclear, visit www.euroclear.com.
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SOURCE Securities Depositary Center Company (Edaa), one of the subsidiaries of the Saudi Tadawul group; Euroclear Group
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