The Saudi National Bank (SNB), the largest bank in the kingdom, has announced the launch of Single Stock Options (SSOs) contracts on its shares, as part of the third edition of the Saudi Capital Market Forum (SCMF) 2024. The SSOs contracts, which are the third derivatives product to be introduced in the Saudi Exchange, will enable local and international investors to hedge and manage portfolio risks effectively, as well as to diversify their investment strategies and opportunities.
The SCMF 2024, which was held between 19 and 20 February in Riyadh, under the patronage of Mohammed Al Jadaan, the Minister of Finance and Chairman of the Financial Sector Development Program, was the largest oil and gas event in North Africa and the Mediterranean region. The forum, which had the theme of “Powering Growth”, featured more than 54 speakers and 69 sponsors, and attracted more than 3,000 attendees from various sectors and industries.
The forum aimed to showcase the latest developments and opportunities in the Saudi capital market, which has been witnessing a remarkable recovery and growth in recent years, thanks to the reforms and incentives implemented by the Saudi government and the Capital Market Authority (CMA). The forum also facilitated the networking and collaboration among the stakeholders and the experts in the capital market, and highlighted the achievements and discoveries in the oil and gas sector.
Some of the key announcements and outcomes of the SCMF 2024 include:
- The launch of SSOs contracts on the SNB, which is the first time that the bank’s shares will be traded as a derivatives product in the Saudi Exchange.
- The announcement of three new members in the Derivatives Market, namely Al Rahji Capital, Al Khabeer Capital, and Al Jazira Capital, which will commence brokerage services later this year.
- The revelation that the number of initial public offerings (IPOs) in the pipeline across the Saudi Exchange’s Main market and the Nomu-Parallel market has increased by 30% year-on-year (YoY) to 56, compared to the previous year.
- The statement that the gross domestic product (GDP) of Saudi Arabia has surged to more than SAR 4 trillion from SAR 2.60 trillion in nominal terms, and that the non-oil GDP has grown by 4.9% in 2023.
SNB: A leader in the Saudi banking sector
The SNB, which was formed in 2020 as a result of the merger between the National Commercial Bank (NCB) and the Samba Financial Group (Samba), is the largest bank in the kingdom, with a market capitalization of SAR 230 billion, and a total assets of SAR 896 billion as of December 2023. The bank offers a wide range of banking and financial services to individuals, corporates, and government entities, and operates through more than 600 branches and 4,000 ATMs across the country.
The SNB has also been a leader in the Saudi banking sector, as it has been implementing various initiatives and innovations to enhance its performance, efficiency, and customer satisfaction. Some of the achievements and awards of the SNB include:
- The launch of the first digital bank in the kingdom, called STC Pay, which is a joint venture between the SNB and the Saudi Telecom Company (STC), and offers a variety of digital banking and payment solutions to the customers.
- The launch of the first green bond in the kingdom, worth $1.5 billion, which is aligned with the Green Bond Principles and the Sustainable Development Goals, and aims to finance the bank’s green projects and initiatives.
- The recognition as the Best Bank in Saudi Arabia, the Best Bank for Corporate Responsibility, and the Best Bank for Sustainable Finance by Euromoney, as well as the Best Bank in the Middle East and the Best Bank in Saudi Arabia by Global Finance.
SSOs: A new derivatives product in the Saudi Exchange
The SSOs contracts, which are the third derivatives product to be introduced in the Saudi Exchange, after the index futures and the index options, are contracts that give the buyer the right, but not the obligation, to buy or sell a specific number of shares of a specific company at a predetermined price and date. The SSOs contracts, which are cash-settled and denominated in Saudi riyals, will have a monthly expiry cycle, and will be subject to a daily price fluctuation limit of 20%.
The launch of SSOs contracts on the SNB, which is the first time that the bank’s shares will be traded as a derivatives product in the Saudi Exchange, will enable local and international investors to hedge and manage portfolio risks effectively, as well as to diversify their investment strategies and opportunities. The SSOs contracts will also enhance the liquidity and depth of the Saudi capital market, and attract more institutional and sophisticated investors to the market.
Khalid Al Hussan, CEO of the Saudi Exchange, said, “The launch of SSOs contracts on the SNB is a significant milestone for the Saudi capital market, as it reflects the continuous development and diversification of our product offerings, and the increasing demand and appetite of our investors for more advanced and sophisticated trading tools. We are confident that the SSOs contracts will add value and benefit to our market participants, and will contribute to the growth and stability of our market.”
