Saudi Exchange unveils new instrument to trade global shares locally

08/07/2025 03:34 AST

Saudi Arabia has introduced a new financial instrument that gives investors in the Kingdom direct access to shares of foreign companies listed on global markets.

The Saudi Exchange on July 7 launched its first Saudi Depositary Receipts, allowing international equities to be traded locally in Saudi riyals.

The move marks the debut of depositary receipts in the Kingdom's financial market and is seen as a strategic leap toward reinforcing Riyadh's position as a global financial center, in line with the Financial Sector Development Program and broader Vision 2030 ambitions.

In a release, Tadawul stated: "SDRs are highly liquid and flexible, enabling issuers to transfer securities between the Saudi financial market and foreign markets by converting the SDRs into shares in the foreign market, thus enabling the company's shares to be traded on two different financial markets."

It described the launch as "a pivotal step toward consolidating the Kingdom's position as a global financial center."

This development is not merely a technical upgrade; it reflects a broader strategic effort to modernize and globalize Saudi Arabia's capital markets.

Since the launch of Tadawul Group's post-initial public offering transformation, the Kingdom has introduced a series of reforms aimed at enhancing market sophistication and accessibility.

These include inclusion in global emerging market indices such as MSCI, FTSE, and S&P Dow Jones; the rollout of derivatives trading; the simplification of Qualified Foreign Investor frameworks; and the acceleration of sector-diverse IPO pipelines.

The introduction of SDRs builds on this momentum by bridging local and international investment landscapes - effectively bringing Wall Street- or London-listed equities to Riyadh's trading screens.

What are SDRs and why do they matter?
A depositary receipt is a financial instrument that represents shares in a foreign company but is traded on a local exchange in the domestic currency.

In the case of SDRs, this means investors in the Kingdom can gain exposure to foreign firms - such as global technology giants, industrial leaders, or energy companies - without needing to open a brokerage account abroad.

Unlike traditional cross-border investing, SDRs enable seamless trading, clearing, and settlement through Tadawul, all denominated in Saudi riyals.

This makes it easier for local investors to access global markets. They can buy international shares through a familiar domestic platform and trade using local brokers. It also helps them diversify their portfolios without dealing with foreign accounts. Most importantly, they remain under the protection of Saudi Arabia's legal and regulatory framework.

Arab News