RIYADH – The Saudi Exchange (Tadawul) has launched a market-making framework for exchange-traded funds (ETFs) as part of its efforts to consolidate the local capital market’s position as a major global financial hub.
According to a press release, the framework introduces a series of obligations by Tadawul, including maximum bid-ask spreads, minimum order size and minimum dwell time.
Meanwhile, the introduction of the framework aims to increase liquidity in the secondary market, narrow bid-bid spreads, enable efficient price formation of Tadawul-listed ETFs, further align the Saudi ETF market with global best practices, and increase market efficiency.
Mohamed Al Rumai, CEO of Tadawul, said: “The launch of the ETF Market Making Framework represents an important step in our ongoing efforts to improve the efficiency and accessibility of the Saudi capital markets and ensure liquidity in the ETF market while increasing investor confidence.”
Al Rumai added: “This initiative reflects our commitment to ensuring market depth and transparency, and our continued focus on strengthening infrastructure, expanding market participation, and solidifying the position of Saudi capital markets as a major global financial hub.”
The ETF market making framework introduces predefined obligations for market makers grouped into three tiers.
Additionally, the choice of ETF classification is determined by mutual agreement between the ETF fund manager and the market maker.
The framework aims to increase liquidity, encourage more frequent trading, and make the market more attractive to domestic and foreign investors.
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