Morgan Stanley Saudi Arabia (MSSA) has become the first investment bank in the kingdom to enter into a swap agreement with a non-resident foreign investor for a single stock.

The announcement comes shortly after Saudi Arabia’s Capital Markets Authority (CMA) approved a resolution to allow authorised persons, such as MSSA, to enter into swap agreements with non-resident foreign investors for individual stocks.

While MSSA retains legal ownership of the shares, the economic benefits of the Saudi companies’ shares are transferred to the investor, said a MSSA official.

Dr Fahad Almubarak, chairman of MSSA, pointed out that the transaction marks an historic milestone for Saudi Arabia, as it is the first time foreign investors are able to have access to companies listed on the Tadawul.

'Morgan Stanley Saudi Arabia is very pleased to be the first to successfully execute a swap transaction on behalf of its client, highlighting our efforts to continually drive innovation in the Saudi market,' he remarked.

Craig Niven, a managing director at Morgan Stanley, lauded the CMA move to provide foreign investors an indirect access to Saudi Arabian stocks.

'Interest from international investors in the GCC’s biggest capital market is very high, and we expect to see a lot more interest in these swap transactions from investors around the world,' he added.

In 2007, Morgan Stanley Saudi Arabia was the first investment bank to introduce the bookbuilding process to initial public offers (IPOs) in Saudi Arabia. It was also the first investment bank to develop a compensation mechanism for non-subscribing shareholders of Saudi rights issues.-TradeArabia News Service