The derivatives team at the Saudi Exchange has confirmed that single stock options (SSOs) contracts will now be available to trade as of 27 November, enabling both local and international investors to hedge and manage portfolio risks effectively.
Securities clearing centre company, Muqassa, will clear and settle the contracts, in line with international best practices.
Speaking to The TRADE, Nayef Al Athel, acting chief of derivatives at the Saudi Exchange, confirmed that the move is set to attract more international investment: “Single Stock Options are the third derivatives product on the Saudi Exchange, following the launch of Single Stock Futures and MT30 and this latest launch will further increase market liquidity and enhance the overall sophistication of the Saudi capital market.
“We believe that these developments will attract even more international investors to the market, allowing them to hedge portfolios and manage risk effectively in line with global practices.”
The update follows the launch of the derivatives market in 2020, as well as the subsequent introduction of the derivatives products MT30 Index Futures (SF30), and Single Stock Futures.
Four underlying assets have been selected: Aramco, Al Rajhi Bank, STC, and Sabic. These entities represent the largest and most liquid companies currently listed on the Saudi Exchange. The suite of SSO contracts is set to be expanded in due course to include additional companies.
Read more – Saudi Exchange makes push into algo and high frequency trading
In addition, the Saudi Exchange is set to launch physically settled American options, the trading venue confirmed.
In an official announcement, Mohammed Al Rumaih, chief executive of Saudi Exchange, said: “The launch of SSOs, the third derivatives product, reinforces the Saudi Exchange’s efforts to providing investors with diversified investment opportunities and tools to manage risk effectively, while increasing market liquidity. The Saudi Exchange continues to explore the introduction of new products and services to the Saudi capital market in line with efforts to align it with international best standards.”