Finance & Capital Market

Saudi Exchange to launch single stock futures contracts

The Saudi Exchange has announced its intention to launch the Single Stock Futures (SSFs) contracts from July 4, the second derivatives product to be introduced in the Exchange.

The new contracts will be available to trade, that will commence on enabling local and international investors to hedge and manage portfolio risks more effectively as well as diversify products available for trading in the market.

SSFs contracts are standard futures contracts with an individual stock as its underlying asset. The underlying stocks have been selected from the largest and most liquid companies listed on the Saudi Exchange. SSFs are traded on the Exchange, similar to other cash market products. SSFs contracts will be cleared and settled by Securities Clearing Center Company “Muqassa” in line with international best practices.

Mohammed Al Rumaih, CEO of Saudi Exchange, said: “We are excited to introduce the second derivatives product to the Saudi Exchange, as we continue to deliver on our commitment to providing a sophisticated and innovative range of products and services to local and international investors. The launch of the SSFs contracts further supports the advancement of the Saudi Capital Market by creating diversified offerings, complemented by hedging tools to manage risk and limit losses in adverse market conditions.”

All investors can trade SSFs through a registered Derivatives member. The 10 underlying assets of the SSFs contracts include: Al Rajhi Bank, Saudi Aramco, Saudi National Bank, Alinma Bank, SABIC, stc, Saudi Kayan, Saudi Electricity, Almarai and Maaden.

The stocks are selected based on a list of criteria that aims to ensure liquidity to meet market demand, maintain market integrity, and enable effective portfolio management, trading and hedging opportunities.

The Saudi Exchange launched the Derivatives Market in 2020, and seeks to introduce additional derivatives products such as Single Stock Options. – TradeArabia News Service