This makes UFX the first retail forex company to tab into exotic market opportunities for their retail clients, deciding to offer for trading, a selection of the most liquid stocks on the Saudi Arabian and Egyptian Stock Markets.
Forex Magnates reporters have reached out to the firm asking about the new offering and the pricing and liquidity of the new instruments. The company stated that its operating a fully STP model and the pricing is provided to UFX by their liquidity provider.
The company did not provide information about their liquidity provider, but according to the current regulatory environment on the Saudi Exchange TADAWUL, foreigners are not allowed to own shares, which makes market making on such products difficult at best.
Raising additional questions about liquidity on such products is the fact that there are no derivatives products in Saudi Arabia nor Egypt which can be used for hedging purposes.
Six Day Trading Week
The offering will be available for trading to clients with a 1:20 leverage and spreads depending on the different sorts of accounts which the firm is offering.
The move is especially appealing to customers from the Middle East, satisfying demand to tab into the local markets and trade some of the companies which are usually available mainly to professional investors.
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UFX is pioneering a 6-day trading week for its clients by launching for trading 10 Saudi Arabian stocks all components of the TADAWUL Index and 5 Egyptian stocks from the EGX30 Index.
The list of the TADAWUL companies available for trading includes Saudi Arabian property developer Dar Al-Arkan, agricultural developer Ash Shargiyah, mobile operators Etihad Etisalat and ZAINKSA, chemicals and steel company Saudi Basic Industries, Saudi banks Al Rahji and Alinma, chemical companies Sahara Petrochemical Co and KAYAN and mining company MAADEN.
The Egyptian companies are telecommunications company Orascom Telecom Media & Technology, real estate developer Amer Group, investment company Arabia Investments, textiles firm Arab Cotton Ginning and the Commercial International Bank of Egypt.
Stocks will be available for trading from Sunday through Thursday in line with the typical trading week in the region.
Middle East Capital Markets Limitations
Normally foreign investors in the capital markets of Saudi Arabia have been prevented from owning stocks. Recently The Capital Markets Authority, which is the main financial regulator for financial markets in Saudi Arabia, has issued new draft proposals for overseas investors looking for exposure in the Kingdom’s financial markets.
The authority proposed that overseas investors be allowed to hold 10% of stocks, with individual investors being capped at 5%. The move comes after several years of discussion and consultations as global traders look to take heed of the Middle East’s most liquid equity markets.
Changes in foreign ownership rules of Saudi Arabia listed companies are expected to be implemented in 2015.