Saudi exchange restricts Aramco index weighting with cap
02.12.2019 - Petr Mazaylo
Saudi exchange restricts Aramco index weighting with cap

DUBAI-Saudi Arabia’s Tadawul is set to impose 15% equity index cap aimed at resolving potential concerns over weighting oil giant Saudi Aramco when it lists on the exchange.

Dubai-owned company Aramco is posed to register 1.5% of its shares this month in a pact expected to raise more than $25 billion and will surpass Chinese retailer Alibaba’s initial public offering (IPO) on the New York Stock Exchange in 2014.

The Aramco IPO is viewed to be a trial for the Saudi exchange whereas a total of $6 billion was the biggest listing so far.

“Any constituent whose index weight reaches or exceeds the threshold will be capped in accordance with the set limit,” said Tadawul on Monday.

Such scheme is part of a wider update of Tadawul’s index methodology, including revamp of free float shares calculation methodology for government-owned shares.

The new measures will “ensure more balanced indices, which will accurately represent the movement of the market, enhance disclosures and transparency and minimize securities’ dominance,” Tadawul’s CEO Khalid Al Hussan said.

Tadawul disclosed that it is armed with “Fast Entry” rule which allows IPO shares to be included in the overall share equity index at the closing of fifth trading day.

The revisions will be put into execution by the end of the year.

Risk disclaimer "Market Solutions Ltd – Suite 305 Griffith Corporate Centre P.O. Box 1510 Beachmont, Kingstown, St Vincent and the Grenadines is a financial services institution outside the European Union Area, which is subject to the supervision of the IFMRRC Certificate 0395 AA V0128 Trading in Forex/ CFDs and Other Derivatives is highly speculative and carries a high level of risk. It is possible to lose all your capital. 70% of trading deals can be unprofitable. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent advice if necessary. Speculate only with funds that you can afford to lose. This Website may contain information in particular regarding financial services and products that could be regarded b a E.U. supervisory authority as an offer of financial services targeted in Europe. ESMA intervention measures do not apply to customers of Market solutions Ltd and it is your responsibility to choose a company which is most suitable for your trading needs. By clicking continue you confirm that you have read, understood and agree to the risk disclosures, terms of service, cash policies, privacy policies and this notice and that you are visiting this website on your own initiative, without any encouragement whatsoever from Umarkets.com or Market Solutions limited." Cookies notification: “We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we assume that you are happy with it. Continue