Beirut (APD) - As the Saudi Stock Exchange, Tadawul, continued to struggle for growth on Monday, the Capital Market Authority (CMA) announced on Tadawul that it approved a license application by Swicorp Financial Advisory Services to provide brokerage and asset management services in the Saudi market. It also issued a license as limited financial services provider to Bakheet Investment Group (BIG). Both are Saudi-registered firms.
With the second such CMA announcement in two days, the number of newly licensed financial intermediaries increased from three to seven. The CMA said on Sunday that it granted brokerage licenses to Riyadh-based Rana Investment Company and to a new enterprise, Team One Company.
"Now that the number of companies that are licensed to carry out brokerage activities has risen, this will foster competition," Brad Bourland, chief economist at Samba Financial Group, told APD.
The licensing move comes in the framework of the Saudi authorities' endeavor to create more competition in the brokerage market, which had been dominated by local banks. According to Bourland, the move was not related to the Kingdom's entry into the World Trade Organization.
"To my knowledge there is no commitment from the CMA vis--vis the WTO to license firms to carry out brokerage activities," Bourland said.
CMA officials were not available for comment on Monday.
The newly licensed brokerage companies represent a mix of local firms with a track record in financial services, foreign partnerships, and new players.
Bakheet Investment Group (BIG) has a capital of SR 60 million. The company is mainly involved in asset management services and its roots go back to 1993.
Established in 1987, Swicorp provides investment banking services to domestic and international businesses in the Middle East and North Africa region. It holds a 75% stake in Swicorp Sigma Egypt.
Rana Investment received a license to carry out a large scope of brokerage services that include asset management and underwriting, in addition to corporate finance and advisory and custody services.
"We have been granted a comprehensive license since we are already involved on the Saudi securities market. We have our skilled workforce and the organization for the stock market activities," Samir Abu Tayeh vice-president for advisory services at Rana Investment told APD on Monday.
Rana Investment which had applied for the license three months ago would embark on research studies on listed stocks and would also create new companies.
"We are a full-fledged Saudi company but we have entered into an agreement with two well known foreign companies that will provide technical assistance to us for our new brokerage activities," Abu Tayeh added.
The other companies granted full or limited brokerage licenses by CMA last November were HSBC Saudi Arabia, Saudi Swiss Securities and Osul Financial.
Further license applications are under review, according to the CMA. In early March, media reported that the large Japanese brokerage House, Nomura Securities, decided to apply for a license in Saudi Arabia.
Experts said they could not yet predict how the licensing of new brokerages would impact the pricing of such services in the Kingdom.
The announcement of the new licenses came in the same trading week when expatriate residents of Saudi Arabia were for the first time allowed to place orders on the Tadawul exchange.
Saudi banks seemed eager to take on the new opportunity. Samba Financial Group, one of the top banks in the Kingdom, announced on its website that expatriates could now open a "Tadawul Account" and start trading on the Saudi Exchange.
However, over the first two days of allowing resident non-Saudis to participate in the market, the Tadawul All Share Index (TASI) slipped further, but on Monday the market gained some relief. After dipping below the 15,000 mark on Sunday, the TASI climbed by 456.89 points or 3.06% to 15,402.88 points in afternoon trading on Monday. [TS]
By Shikrallah Nakhoul, APD Staff Writer in Beirut
APD (Arab Press Digest) 2006
