Saudi bourse to offer e-bonds trading

Saudi Arabia's bourse, the largest in the Middle East, has completed preparations to begin electronic bonds trading this year and economists expected the new facility to attract investment to the Gulf Kingdom.

The Tadawul has installed an electronic network for bonds and it would be launched in the last quarter of this year following an increase in bond issue.

"Dealing in bonds electronically will begin in the fourth quarter of this year… there have been such dealings, but not electronically," said Turki Fadak, deputy chairman of the stocks committee a the Jeddah Chamber of Commerce.

"But now with the steady growth in bonds issue, there was a need for electronic dealing along with the existing electronic share trading. We expect this project to expand the bonds issue and stimulate the market. We also hope this new facility will lead to an integrated bourse covering various types of investment tools," he was quoted as saying by Saudi Arabic language newspapers.

Experts said Saudi Arabia has one of the largest bonds markets in the Middle East but lacked the framework for such activities. They said bond trading is conducted through brokers but is not covered by the electronic system.

"There is no doubt this new electronic facility for bonds will organise bonds dealing and this will expand the issue activities," said Malik Yunus, an economist at the Saudi National Commercial Bank. "This in turn will give the market more depth, expand and diversify investment tools and attract capital."

Saudi Arabia has the largest stock exchange in the region in terms of market capitalisation, which stood at Dh1.8 trillion on Thursday.