JEDDAH, 27 March 2006 -- The Saudi Capital Market Authority (CMA) announced yesterday that it had granted brokerage licenses to two new companies: Rana Investment Company and Team One Company.

With the granting of licenses to these two firms the number of companies allowed to provide stock market services has risen to five.

The CMA's move to license these two firms to carry out brokerage services is part of their efforts to ease the tight grip of banks on the sector. The CMA says it is considering applications of brokerage firms and more licenses are likely to be awarded soon.

"This will build up the structure of the market, improve the quality of financial services, boost awareness, bring a research industry and create more competition against banks now controlling brokerage," Reuters quoted Abdulaziz Alzoom, spokesman of the CMA, as saying.

Banks have for years dominated the brokerage industry in the Arab world's largest bourse, which trails behind Gulf peers in market regulations and liberalization.

The CMA provided Rana with a comprehensive license for brokerage, asset management, underwriting, corporate finance, advising and custody. It granted Team One a license for financial consultancy and custody.

"There are more license applications in the pipeline which will be granted in the coming few weeks," Alzoom said.

In November, CMA granted HSBC a full license to provide stock market services like brokerage, asset management and financial advisory.

It also granted limited brokerage licenses to Saudi firm Osul Financial and to Saudi-Swiss Securities, a joint venture between Gulf investors and Credit Suisse.

An official source said these steps are part of a CMA drive to improve standards and transparency in the bourse. "We will be doing research on listed stocks and we are looking forward to starting business," Rana's Chief Executive Mazen Al-Hassouneh said.

"We applied for the license three months ago and the CMA has been very forthcoming, prompt and professional," he said.

Rana is the first wholly owned Saudi company to have been granted such a license.

The Saudi stock market continued to plunge yesterday, a day after the government opened the market to expatriates. The response by expats is still lukewarm as they are still trying to sort out procedural details on how to invest.

One expat, who spoke on condition of anonymity, said the CMA could facilitate expat activity on the stock market by putting all announcements on its website in Arabic as well as in English. This would give expats access to information about the market and the listed companies. At present the information is in Arabic.

The Tadawul All-Share Index (TASI) dropped below 15,000 mark to close 322.47 points or 2.11 percent lower at 14,945.99 yesterday. The market turnover, however, increased yesterday to SR10.49 billion compared to SR5.68 billion on Saturday.

The major Banking and Industrial Indexes suffered heavily. In the banking sector, shares of five banks edged higher while shares of other five banks declined.

Shares of Saudi Basic Industries Corporation (SABIC) fell slightly to SR1,431 despite it signing a $120 million agreement with a Finnish company to purchase its stake in Ibn Zahr, a Saudi-European petrochemical company.

After the agreement, SABIC now holds 80 percent stake in Ibn Zahr. The remaining shares are with Arab Petroleum Investment Corp. (APICORP) and an Italian company.

Yesterday, only the Insurance Index was up as shares of the National Company for Cooperative Insurance jumped 4.19 percent to SR696.

By Khalil Hanware

© Arab News 2006