SSO contracts makes market more attractive, lure investors: SNB Capital

 Loai Bafaqeeh, Head of Securities at SNB Capital

The launch of single stock options contracts on the Saudi Exchange (Tadawul) is an important step to make the market more attractive to international and institutional investors, who used to invest and trade in stock options contracts in developed markets, Loai Bafaqeeh, Head of Securities at SNB Capital, told Argaam. 

He added that this enhances the confidence of institutional and international investors who look forward to new services and products to serve their investment goals. The move will also reflect positively on the market’s development and stability, as well as lure investments and fresh cashflows.

The SSO contracts enhance the diversity of financial instruments in Tadawul, providing opportunities to improve risk management and hedging. In addition, they will allow the possibility of investment or speculation to achieve profits, Bafaqeeh said.

He indicated that the addition of four companies in the first phase will contribute to attracting investors by offering more opportunities. This will also contribute to increasing the knowledge of new investors and boosting confidence of current investors to start trading and investing in this type of financial instruments.

Investors can use the SSO contracts to protect against price fluctuations in the stock market and enhance profit strategies. The launch of this product can also stimulate investor behavior by boosting investments in the market and benefiting from the financial leverage provided through options contracts.

This opportunity means that investors can achieve returns or a greater level of protection compared to the invested capital, Bafaqeeh said.

He added that SNB Capital is the first market maker in the derivatives market on the MT30 Index Futures, stressing that it plans to be a market maker for the SSO contracts whenever the relevant regulations are available.

As for the guarantees deposited by the company with the Securities Clearing Center Co. (Muqassa), the official said that their size depends on the market's trading volume and is controlled dynamically to ensure the continuity of providing the best service to customers in the financial sector, in cooperation with Muqassa and the Saudi Tadawul Group.