Saudi Arabia reduces fees, trading commissions for local bond market


Saudi Gazette report

RIYADH — Saudi Arabia’s Capital Market Authority (CMA), the Saudi Stock Exchange (Tadawul) and its Debt Management Office (DMO) announced in a joint statement on Thursday reduced fees and commissions to encourage secondary market trading of debt, the Saudi Press Agency reported.

The three entities said trading commissions for the Tadawul, the Middle East’s largest bourse, and the CMA had been reduced, while fees for new offerings and annual registration charges for issuers were also reduced.

In addition, Tadawul’s annual listing fees and fees for subsequent issuances fees were slashed. They said that these are part of joint efforts to further develop the capital market with a series of enhancements to the structure of fees and commissions of the sukuk and bonds market.

The DMO also reduced the par values for government issued sukuk (bond) from SR1 million to SR1,000, the statement said, signaling further government efforts to attempt to facilitate access to the bond market for retail investors.

The changes for market stakeholders and investors will include deregulation of brokerage commissions and elimination of the minimum commission cap required. Trading commissions for Tadawul and CMA have also been reduced and CMA will waive the trading commission on all types of investors with the exception of special cases.

In this regard, Mohammed Al Kuwaiz, chairman of the CMA, said that enhancing the effectiveness of debt instruments is key to achieving CMA’s strategy for advancing the capital market in line with the Financial Sector Development Program (FSDP) and Vision 2030. “This restructuring of fees showcases this cooperation to stimulate development of the debt market and encourage sukuk and bonds issuance and trading,” he said.

Fahad Al Saif, head of the Debt Management Office (DMO), said: “Enhancing the fees will have a significant positive impact on sukuk and bonds market and encourage sukuk and bonds issuance and trading in governmental issued sukuk and activate its secondary market.”

On his part, Khalid AI Hussan, CEO of Tadawul, said that these changes represent an important step in further enhancing the Kingdom’s capital market by encouraging issuers to list more Saudi currency sukuk and bonds in the public debt market and facilitating increased trading by investors which will result in greater market liquidity.

“Increased liquidity of the debt market will, in turn, contribute to the issuance of more diversified debt instruments and introduction of new asset classes for investors ”