Saudi bourse to start new settlement period, short-selling on 23 April
Saudi Arabia's stock exchange (Tadawul) said on Thursday it would extend the period for settling trades and introduce short-selling on 23 April. Trades will be settled within two working days of execution, a reform demanded by index compilers, such as MSCI, in line with many emerging markets. Currently, trades must be settled on the same day, which inconveniences foreign investors as they need to have large amounts of money on hand before trading. This can be difficult, given Riyadh's time zone and its Sunday-Thursday business week. MSCI is due to decide in June whether to begin reviewing Saudi Arabia for inclusion in its emerging market index. Tadawul also said it would permit short-selling of stocks and the borrowing and lending of securities, allowing investors more flexibility to hedge. Several restrictions are imposed to limit the risk of destabilising the market; investors can only sell borrowed stocks short; the practice is limited to certain investors such as funds, and the exchange will specify which individual stocks can be sold short.
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