Saudi Exchange revamps derivatives rules to lure foreign investors and boost liquidity

The Saudi Exchange, known as Tadawul, has rolled out a package of derivatives-market reforms that include reduced trading fees and the assignment of market-making firms to guarantee liquidity. The updated rules entered a testing phase on Aug. 19 and have already generated about $60 million in derivatives activity, up from virtually none. By making the market more appealing to foreign investors, the bourse hopes to offset falling fee income from stock trading and create a new source of revenue.

This initiative is part of a wider push to revive trading volumes, which includes lifting restrictions on foreign investors buying Saudi shares and reviewing limits on foreign stakes in domestic firms. Regulators are also examining the poor performance of recent IPOs. Overall, the measures seek to rejuvenate market activity after the Iran war dampened investor confidence.