Tuesday 10, January 2017 by Georgina Enzer

Tadawul publishes draft rules for settlement cycle

The Saudi Stock Exchange “Tadawul” has published its Draft Rules for the T+2 settlement cycle for public consultation, aimed at encouraging all concerned parties to submit and share their views in the interests of greater efficiency and transparency.

This is a particularly important milestone in Tadawul’s drive to align its capital markets with international best practices. The T+2 settlement cycle is planned to be implemented during the second quarter of 2017.

These Draft Rules for the T+2 settlement cycle are primarily concerned around the proposed regulations and procedures surrounding adoption of a Delivery Versus Payment (“DVP”) system including the segregation of custody and settlement, and covered short selling.

Among the provisions of the Draft Rules is the requirement for all brokers that are Exchange Members to become Custody Members of the new Securities Depository Centre. Further details of the procedures for Securities Borrowing and Lending have been set out, including a maximum term of 12 months for any Securities Borrowing and Lending Transaction and a limitation that borrowed securities may only be relent on one occasion.

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