Edaa CEO says linkage agreement with Euroclear boosts cash flows to Saudi bond, sukuk market

Raed Alhumaid, CEO of Edaa  

The Securities Depository Center Co. (Edaa), a wholly-owned subsidiary of Saudi Tadawul Group, signed an agreement with Euroclear Bank, the Brussels-based International Central Securities Depository (ICSD), to launch a fully Euroclearable link, Chief Executive Officer (CEO) Raed Alhumaid told Argaam in an exclusive.   

Under the agreement, Euroclear investors will have access to the Saudi local sukuk and bond market, but not to the stock and derivatives market.

The agreement success will not only be reflected on Edaa and Tadawul, but also on the investor base, he said.

“It will attract investment flows in the Saudi bond and sukuk market from Euroclear, which implies an increase in the number of buyers and sellers,” Alhumaid noted on the sidelines of the second day of the Future Investment Initiative (FII), expecting the pact to boost the financing of economic projects.

The agreement aims to increase cash inflows to the local bond and sukuk market.

In addition, demand for Saudi bonds and sukuk is expected to grow with better coverage for issuances, Alhumaid said.

Demand in the bond and sukuk market saw a rising growth in the last three years, Alhumaid explained, noting that linkage with Clearstream and Euroclear will fast-track the market pace.

The link is expected to be launched in March 2022, after conducting tests with Euroclear to ensure the system safety and efficiency, he concluded.