SFS: Vision 2030 and securities finance in Saudi Arabia
29 April 2025 Saudi Arabia
Image: Karl Loomes
Kicking off the inaugural Securities Finance Times Middle East Symposium in Riyadh, Saudi Arabia, the first panel of the day discussed Vision 2030, and how the Kingdom’s broad plans to diversify away from oil revenue have, and are set to, impact the securities finance market.
Moderator Steve Griffiths, CEO at Absolute Collateral, began proceedings with the key aspect of Vision 2030 that will dominate the panel — the importance and advancement of the securities finance market in Saudi Arabia, and its strategic position in the region.
Regulations have been key, noted Madhur Bhandari, head of Saudi Arabia, Securities Services, at HSBC, who highlighted the opening up of the market for qualified financial institutions, the introduction of independent custodians, and the advancing of capital market institutions, to name a few.
Another key advancement for the Kingdom’s market, he added, is the country’s incorporation in the MSCI Emerging Market Index — potentially one of the fastest transitions from a watchlisted state, to inclusion in the benchmark.
Despite much of the progress that has been made, there is still room for advancement in the secondary market, suggested Sylvain Bigaud, chief representative officer DIFC, regional head of Middle East, Africa and Turkey at Euroclear. The country, and its regulators, are addressing problems to standardise the ecosystem, he said, suggesting this could lead to even greater advancement for the country’s capital markets.
Taking a broader overview of Vision 2030, Shikkoh Malik, senior director, head of securities services at Albilad Capital, brings with him a wealth of experience in working within Islamic markets and Shariah-compliant financial services.
From his perspective, Vision 2030 is perhaps one of the most transparent of such efforts he has seen — both in terms of goals and plans, as well as what has been achieved and what still remains to be accomplished.
The islamic market, Malik identified, has been growing just as the conventional one has, following in a generally more agile fashion. So agile in fact, that in some cases the islamic market has even “leapfrogged” the conventional. That said, the fine balance between allowing for innovation, and adhering to the fundamental principles that define islamic finance, is also always a consideration.
Taking an international perspective, Grant Mansfield, EMEA head of trading for agency securities lending and cash reinvestment at BNY, emphasised the importance of the region as a whole, and the Saudi market, to BNY. The challenges however, are not unlike others participants face when entering other new markets, such as those seen in a number of APAC countries.
BNY has been aided and has facilitated in advancing its securities finance solutions in the region, he noted, through the support of its local partners, and the cooperation and efforts of government and regulators. Everyone, he said, has a willingness to get the required framework in place.
Naturally, market participants' willingness, and the proactive efforts of the Kingdom's regulators and governing bodies, is not the only consideration — technical challenges and aspects are another major area that needs to be addressed.
While the conventional market is mature globally — including in its relations to Saudi Arabia led by the country’s central banks on CSD — an area that it lacks is in pricing, suggests Bigaud. He highlights the lack of liquidity in Islamic repo particularly, hindering accurate pricing in the market.
With this, and other areas however, triparty may be a key solution, and one that a number of panellists underscore as both aiding in much needed liquidity, but also requiring the appropriate technologies and systems, like straight-through processing.
Reiterating this point, State Street’s KSA country head, Majed Al Hassoun, indicated that while triparty is key, the trajectory in this space is positive. Meanwhile some other specific aspects that will be fundamental in development of the market, he noted, are expanding collateral eligibility, and the development of intraday collateral substitution and optimisation.
Bigaud suggests that interoperability with international systems, from both a technical and understanding perspective, will be essential, for example through the inclusion of local instruments in a broader range of international baskets. As Malik points out, even for islamic borrowers, it is easier to go down the conventional route.
Looking towards the future, the panel raised the topic of new technologies, including digitisation and automation, which they said will be a main driver of the market’s success going forward. As one panellist put it: “Islamics will grow on the back of technology.”
Moderator Steve Griffiths, CEO at Absolute Collateral, began proceedings with the key aspect of Vision 2030 that will dominate the panel — the importance and advancement of the securities finance market in Saudi Arabia, and its strategic position in the region.
Regulations have been key, noted Madhur Bhandari, head of Saudi Arabia, Securities Services, at HSBC, who highlighted the opening up of the market for qualified financial institutions, the introduction of independent custodians, and the advancing of capital market institutions, to name a few.
Another key advancement for the Kingdom’s market, he added, is the country’s incorporation in the MSCI Emerging Market Index — potentially one of the fastest transitions from a watchlisted state, to inclusion in the benchmark.
Despite much of the progress that has been made, there is still room for advancement in the secondary market, suggested Sylvain Bigaud, chief representative officer DIFC, regional head of Middle East, Africa and Turkey at Euroclear. The country, and its regulators, are addressing problems to standardise the ecosystem, he said, suggesting this could lead to even greater advancement for the country’s capital markets.
Taking a broader overview of Vision 2030, Shikkoh Malik, senior director, head of securities services at Albilad Capital, brings with him a wealth of experience in working within Islamic markets and Shariah-compliant financial services.
From his perspective, Vision 2030 is perhaps one of the most transparent of such efforts he has seen — both in terms of goals and plans, as well as what has been achieved and what still remains to be accomplished.
The islamic market, Malik identified, has been growing just as the conventional one has, following in a generally more agile fashion. So agile in fact, that in some cases the islamic market has even “leapfrogged” the conventional. That said, the fine balance between allowing for innovation, and adhering to the fundamental principles that define islamic finance, is also always a consideration.
Taking an international perspective, Grant Mansfield, EMEA head of trading for agency securities lending and cash reinvestment at BNY, emphasised the importance of the region as a whole, and the Saudi market, to BNY. The challenges however, are not unlike others participants face when entering other new markets, such as those seen in a number of APAC countries.
BNY has been aided and has facilitated in advancing its securities finance solutions in the region, he noted, through the support of its local partners, and the cooperation and efforts of government and regulators. Everyone, he said, has a willingness to get the required framework in place.
Naturally, market participants' willingness, and the proactive efforts of the Kingdom's regulators and governing bodies, is not the only consideration — technical challenges and aspects are another major area that needs to be addressed.
While the conventional market is mature globally — including in its relations to Saudi Arabia led by the country’s central banks on CSD — an area that it lacks is in pricing, suggests Bigaud. He highlights the lack of liquidity in Islamic repo particularly, hindering accurate pricing in the market.
With this, and other areas however, triparty may be a key solution, and one that a number of panellists underscore as both aiding in much needed liquidity, but also requiring the appropriate technologies and systems, like straight-through processing.
Reiterating this point, State Street’s KSA country head, Majed Al Hassoun, indicated that while triparty is key, the trajectory in this space is positive. Meanwhile some other specific aspects that will be fundamental in development of the market, he noted, are expanding collateral eligibility, and the development of intraday collateral substitution and optimisation.
Bigaud suggests that interoperability with international systems, from both a technical and understanding perspective, will be essential, for example through the inclusion of local instruments in a broader range of international baskets. As Malik points out, even for islamic borrowers, it is easier to go down the conventional route.
Looking towards the future, the panel raised the topic of new technologies, including digitisation and automation, which they said will be a main driver of the market’s success going forward. As one panellist put it: “Islamics will grow on the back of technology.”
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