November 11, 2012 / 3:12 PM / in 5 years

Saudi Arabia allows rights trade on stock market

JEDDAH, Saudi Arabia (Reuters) - Saudi Arabia’s Capital Market Authority is allowing subscription rights for share offers to be listed and traded on the Saudi stock market, as it modernizes the market in preparation to permit the entry of foreign investors.

“This framework aims to add further protection and flexibility to those investors that do not have the intention to subscribe to their entitlements,” the regulator said in a statement announcing the initiative on Sunday.

Abdulhamid abu Dahesh, a Saudi financial advisor, said the new framework was similar to those in developed European stock markets, and was a step towards trading practices in advanced financial systems.

Saudi Arabia has been making preparations to open its stock market, the Arab world’s largest, to direct investment by foreign institutions but has not yet announced a date for the reform, apparently because it is concerned about the possibility of destabilizing the market.

Reporting by Asma Alsharif; Editing by Andrew Torchia

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