MSCI, Tadawul Sign Agreement to Launch a Tradeable Index Later This Year

Global index provider MSCI announced the signing of an agreement with the Saudi Stock Exchange Co (Tadawul) to jointly launch a tradeable index later this year, Reuters reports, a “move that could spur the growth of derivatives and exchange-traded funds.”

The Tadawul said it would introduce exchange-traded derivatives in the first half of 2019.

According to a separate Reuters report, the composition of new MSCI-Saudi tradeable index is not yet fixed, and the Tadawul will publish standards later. MSCI said the index would be based on the broader MSCI Saudi Arabia index series, part of the MSCI Emerging Markets Index.

The moves come after MSCI classified Saudi Arabian equity market as an emerging market in June, which is expected to attract billions of dollars of passive funds.

In a video interview with BloombergMSCI Inc. Chairman and Chief Executive Officer Henry Fernandez discussed Saudi Arabia’s stock market and the level of interest from foreign investors, even if state-owned oil giant Aramco doesn’t list its shares.