Saudi Arabia’s Capital Market Authority (CMA) is currently reviewing four requests for initial public offerings from firms looking to list on the main and parallel markets, CMA Chairman Mohammed El-Kuwaiz told Argaam in an exclusive interview.
The market regulator is also seeing increased interest from foreign financial institutions and qualified investors that are eyeing access to the Saudi market, he said.
Q:The CMA announced a slew of reforms recently to revive the market and lure foreign investors. Any further plans afoot?
A: The CMA and Saudi Stock Exchange (Tadawul) announced major changes last month, including a relaxation of regulatory qualification requirements for institutional foreign investors. On market infrastructure, Tadawul has announced changes to the independent custody model and allowed asset managers to aggregate orders. These decisions took effect as of Jan. 21.
Tadawul, on its part, plans to modify closing price calculation criteria and will launch a market making scheme. We expect these to be implemented in the second quarter of this year.
The CMA will continue to monitor the market to see the need for further reforms.
Q: How have the reforms implemented last year (e.g. T+2 and short-selling) been received by market participants?
A: The reforms have been received quite positively especially by institutional and international investors.
Q. Any new entrants expressing interest in listing on the Saudi stock market?
A: Four firms have expressed interest in listing on the stock market. We received their applications and are reviewing them.
Q: Do you expect more foreign banks and international financial institutions (IFIs) to apply for licenses this year, ahead of Aramco IPO?
A: Since the easing of licensing requirements in October, we have seen more institutions apply for new licenses, and saw incumbent authorized persons request an expansion of investments. We also have seen higher interest from international financial institutions to do business in the Kingdom. Examples include Citigroup, Macquarie Capital Saudi Arabia LLC and First Abu Dhabi Investment Saudi Co.
Q: Will the listing of Aramco take place on Tadawul before potential international venues?
A: The detailed structure of the IPO is yet to be confirmed. All final decisions on Aramco's listing will be communicated in due course. However, it was announced that Tadawul will be the main venue, given the fact that the company's listing is a cornerstone in Saudi Vision 2030.
Q:Is the CMA ready for the IPO in 2018? Any amendments required for so doing?
A: The CMA made changes to improve and ease the listing process. For example, the new Rules on the Offer of Securities and Continuing Obligations (OSCO) were recently issued and will take effect as of April 1. New regulations were designed to accommodate future IPO applications, including Aramco's.
Additionally, the CMA recently amended The Instructions of Book Building Process and Allocation Method in Initial Public Offerings (IBBPA), in order to provide more flexibility to the book-building process and the share allocation mechanism.