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Saudi Aramco IPO unlikely to require rule changes says regulator

December 7, 2016 10:50 am

Investors monitor screens displaying stock information at the Saudi Stock Exchange in Riyadh. (Image: Reuters)

* No major rules changes needed for Saudi Aramco IPO

* It may need to look at operations for dual listing

* Nearly 10 applications for SME market received

 

Saudi Aramco’s planned flotation is unlikely to require any major changes to Saudi Arabia’s securities rules, the vice chairman of the kingdom’s market regulator said.

The state oil giant is targeting 2018 for what is expected to be the world’s biggest initial public offering, with a listing at home and overseas among the options.

Saudi Arabia’s ambitious Vision 2030 plan to diversify away from oil includes greater private sector involvement and improving the efficiency of state-owned companies.

Should a dual listing happen, some work might be needed involving the management of shares between two markets, such as the mechanics on the sharing of information on trades, Mohammed bin Abdullah Elkuwaiz of the Capital Market Authority (CMA) told reporters on the sidelines of a conference on Tuesday.

 

(Saudi Aramco eyes 2018 for listing, says CEO)

 

Saudi Arabia has never before had a dual listing involving a company listed on its bourse, which is known as the Tadawul.

“If there is a decision to list in another exchange, whether it is Aramco or any other company, there would be something that will need to be done, but most of this is more on the operations side not the regulatory side,” he said.

Ultimately it will depend on the structure which Aramco decides to employ on its listing, but from what the CMA is anticipating there would be no need for additional rule changes, Elkuwaiz added.

 

Initiatives

The CMA has made changes to existing regulations in recent months and introduced new initiatives aimed at developing the market and securing inclusion in global indices such as MSCI which are shadowed by international investors.

Among these are the gradual opening up to foreign capital – the latest incarnation coming into force at the beginning of September – and a switch to settlement of trades within two working days, which is on track for the first half of 2017, Elkuwaiz said.

 

(Aramco CEO says studies several foreign exchanges for 2018 listing)

 

A market for small and medium-sized businesses, announced in April and expected to go live in early 2017, had received close to 10 applications even though the draft rules had not been approved yet, he added.

Elkuwaiz, who is heading the regulator after Mohammed al-Jadaan was named finance minister on Oct. 31, said it was unclear when a new CMA chairman will be appointed.

 

(Saudi Aramco listing lures banks with prospects of game-changing deals)

 

An unintended consequence of the settlements change and the SME market launch would be that plans for a prime section of the Tadawul – a new index which would contain top blue-chip stocks – would likely be delayed, Elkuwaiz said.

A new corporate governance law containing additional measures to protect shareholders was also close to being announced and may be used to judge which companies qualify for the prime index, he added.

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Reuters
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