The Saudi riyal-denominated Sukuk and bonds market has entered a new stage in the development of secondary trading, with the execution of transactions linked electronically to clearing and settlement operations within the local market.
The significance of the step is not limited to digitizing the execution of transactions; Rather, it extends to facilitating access to liquidity, improving price discovery, and reducing manual procedures. The importance of this link is also highlighted in the experiences of international markets that developed electronic trading in parallel with the integration of the local post-trading structure.
The new mechanism comes with the availability of electronic trading for local investors and dealers through an alternative trading system managed by TradeWeb, in addition to the path that has been made available to international investors since the launch of the system in Saudi Arabia last year.
The American Tradeweb, which operates in Saudi Arabia an alternative trading system licensed by the Capital Market Authority for trading sukuks and debt instruments, reported that GIB Capital and First Saudi Bank executed the first local deal through the system, while the details of the deal were referred to the Securities Clearing Center Company (Muqassa) to complete post-trading procedures, and then to the Securities Depository Center Company (Edaa) to complete the settlement.
The new mechanism differs from simply adding an electronic channel to execute transactions; It links the implementation and post-trading stages within one path. The system allows the local investor to request quotes from qualified dealers and compare them electronically, before sending the details of the executed transaction to “Muqasa”, which issues settlement instructions to “Edaa”. Participation is limited to professional investors and local dealers who meet the requirements for registration and accounts with the relevant authorities.
Before the launch of the new mechanism, the process of executing transactions and local settlement took place through separate paths, which may require transferring or entering transaction details between different systems. The new model provides a connected electronic record from deal execution to post-trading stages, reducing repetitive data entry and manual intervention, and improving traceability and auditing of the process, without changing the nature of bilateral deals or established local settlement arrangements.
General Manager and Co-Head of Global Markets at TradeWeb, Enrico Bruni, told Asharq Al-Awsat that electronic trading does not create liquidity in itself, but it makes existing liquidity easier to access and find.
He explained that the mechanism for requesting quotations allows investors to compare prices provided by qualified dealers through a unified and trackable process, adding that increasing the number of clients and dealers using the mechanism can support - over time - the efficiency of price discovery and deepening the secondary market.
From international market to local trading
The step comes after the launch of the alternative trading system in Saudi Arabia in October 2025, which in its first phase allowed international investors to trade electronically in sukuks and debt instruments denominated in riyals. The first phase witnessed deals between international institutions, including BlackRock, BNP Paribas, and Goldman Sachs.
With the addition of the local route, the system now provides an electronic channel for institutions and customers inside Saudi Arabia, while keeping post-trading and settlement operations within the local infrastructure. This means that the process of executing a deal can begin electronically from a request for quotations, and end within a local clearing and settlement path.
The platform is still in the early stage of its development, and Bruni did not provide specific data on trading volumes since its launch. He said that the activity began to focus on making debt instruments denominated in riyals available to international investors, before adding a path for trading among local participants.
Liquidity and price discovery
Bruni does not believe that switching to electronic trading creates liquidity on its own, but rather it could make the already available liquidity easier to access. As the participant base expands, standardizing the mechanism for requesting quotes and comparing dealer offers can help improve price discovery.
This issue is gaining importance with the expansion of the debt market in Saudi riyals and the increased participation of international investors. It is expected that Saudi government debt instruments will be included in the JPMorgan Emerging Markets Government Bond Index in stages, starting in January 2027, which will expand the base of investors who track the index or invest in its tools.
The expansion of the international investor base, coupled with the growth of local participation, may represent a factor in increasing the need for more efficient mechanisms for accessing dealer liquidity and price discovery. Especially with the development of the secondary market.
Areas for expansion
Opportunities to increase electronic trading in the future are not limited to government instruments and debt instruments denominated in riyals. Potential areas include institutional bonds, repurchase agreements, and derivatives, according to Bruni, provided that the introduction of these instruments is linked to customer demand, the availability of liquidity, and the necessary regulatory approvals. The Capital Market Authority had licensed TradeWeb to engage in market activity in the form of an alternative trading system for sukuks and debt instruments.
The current structure allows the addition of other products and trading mechanisms, while maintaining the account structures, settlement arrangements, and trading practices applicable in the Saudi market, according to the company.
Bruni says that the success of the mechanism over the next two or three years will not be measured by a specific trading volume, but rather by the expansion of the base of local and international investors who use it on a regular basis, the growth of the network of liquidity providers, and the breadth of the range of instruments traded.
Thus, the impact of the new path is focused on the operational side of the secondary market, by reducing the gap between executing the deal and its settlement, and facilitating access to local liquidity, which may support the development of trading in sukuks and bonds denominated in Saudi riyals as the participant base expands.
