(Adds drafts short-selling, securities lending rules)
DUBAI Jan 9 The Saudi Stock Exchange will
introduce settlement of trades within two working days of
execution during the second quarter of 2017, the bourse said on
Monday as it published draft rules for short-selling and the
borrowing and lending of securities.
Trades must be settled on the same day for now. This has
inconvenienced foreign investors in particular as they must have
large amounts of money on hand before trading, which can be hard
given Riyadh's time zone and its Sunday-Thursday business week.
"Introducing the T+2 settlement cycle aims to align the
Saudi stock market with leading global settlement practices, and
to increase levels of asset safety for investors," the exchange
said in a statement.
As part of a drive to attract more foreign investment, the
Capital Market Authority said last May that a switch to T+2
settlement, which is used by many big emerging markets, would
occur sometime during the first half of 2017.
The exchange said on Monday that T+2 settlement would be
applied in ways that did not slow trading activity. "Sellers are
... able to sell purchased securities immediately with no need
to wait for cash settlement of the transaction."
It asked the public for comments by Feb. 8 on draft rules
for introducing covered short-selling and the borrowing and
lending of stocks. In short-selling, an investor sells borrowed
securities in the hope of buying them back at a cheaper price.
The exchange did not specify when short-selling would begin.
Saudi regulators hesitated to introduce the practice for years
because of concern that it could destabilise the market, but it
may help to attract foreign investors by giving them a chance to
hedge their purchases.
(Reporting by Tom Arnold and Andrew Torchia; Editing by Louise