Saudi Exchange to allow single-stock futures trading on selected shares in July

RIYADH: Saudi Arabia’s stock exchange will launch futures trading on single stocks on July 4, amid efforts to bolster liquidity and lure investors into the region’s biggest bourse.

The first tranche of the futures contracts will include Al Rajhi Bank, Saudi Aramco, Saudi National Bank, Alinma Bank, SABIC, Saudi Kayan, Saudi Telecom Co., Saudi Electricity Co., Almarai, and Ma’aden.

A single-stock future is a type of futures contract between two parties to exchange a specified number of stocks in a company for a price agreed today with delivery occurring at a specified future date.

The move will “enable local and international investors to hedge and manage portfolio risks more effectively as well as diversify products available for trading and hedging in the market,” Tadawul said in a statement.

“This development is excellent and will add more flavor to market speculation and hedging strategies,” Mohammed Al Suwayed, CEO of Razeen Capital, told Arab News.

Single-stock futures will be the second derivatives product on the Kingdom’s bourse, after the launch of index futures in late 2020.

In an interview with Al Arabiya, CEO of the bourse Mohammed Al-Rumaih said: “Trading on single-stock contracts will be half an hour before the market opens, and the closing will be half an hour after the market closes.”

“Each company will have four contracts, which represent the current month, the next month, the next quarter, and the current quarter,” the executive added.

Al-Rumaih also noted that Tadawul is looking to unveil additional products, including single-stock options in the near future.