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Frequently Asked Questions

What is Nomu - Parallel Market?

Nomu is a parallel equity market with lighter listing requirements that serves as an alternative platform for companies to go public. The investment in this market is restricted to Qualified Investors.

Why is Tadawul creating Nomu - Parallel Market?

Launching Nomu - Parallel Market is a step towards fulfilling Tadawul’s plans to further develop the capital market. It is also in alignment with the objectives of the 2030 Vision which stress the importance of developing a more advanced capital market open to the world, allowing greater funding opportunities and stimulating economic growth. This will in turn generate more diverse investment opportunities and instruments for all capital market participants.

What are the differences between the Main Market and Nomu - Parallel Market?

  Main Market Nomu – Parallel Market
Minimum Market Cap SAR 300 million SAR 10 million
% Offered At least 30%
  • At least 20% of the issued shares at the time of listing
  • Or floating SAR 30 million worth of shares in the market, whichever is less
Public Shareholders At least 200

ِِAt least 50 

Continuous Obligations
  • Standard disclosure requirements.
  • Disclosure of quarterly financial statements within 30 calendar days from the end of the period
  • Year-end financial statements within 3 months from the end of the period    

Lighter financial disclosure requirements than the Main Market (with regards to time permissible to disclose):

  • Disclosure of semi-annual* financial statements within 45 calendar days from the end of the period
  • Year-end financial statements within 3 months from the end of the period
Daily Fluctuation Limits ±10% ±20%

* This change will be effective starting from 01/01/2020 

Who can invest in Nomu - Parallel Market (QUALIFIED INVESTORS)?

Given that Nomu – Parallel Market is restricted to Qualified Investors, Authorized Persons (APs) must determine who is eligible. Qualified Investors are defined as per the below criteria:

  1. Authorized Persons act for their own account.
  2. Clients of an Authorized Person who conduct managing activities provided that this Authorized Person has been appointed as an investment manager on terms which enable making decisions concerning the acceptance of an offer and investment in Nomu - Parallel Market on the client’s behalf without obtaining prior approval from the client.
  3. The Government of the Kingdom, any government body, any global/international authority recognized by the CMA or the Exchange, and any other stock exchange recognized by the CMA or the Securities Depository Center Company (“Edaa”).
  4. Government-owned companies either directly or through a portfolio managed by a person authorized to carry out managing activities.
  5. Companies and funds established in a member state of the Cooperation Council for the Arab States of the Gulf.
  6. Investment Funds.
  7. Non-resident foreigners permitted to invest in the Parallel Market and who meet the requirements stipulated in the Guidance Note for the investment of Non-Resident Foreigners in the Parallel Market.
  8. Qualified foreign financial institutions.
  9. Legal persons allowed to open an investment account in the Kingdom and an account at the Securities Depository Center Company (“Edaa”).
  10. Natural persons allowed to open an investment account in the Kingdom and an account at the Securities Depository Center Company (“Edaa”), and fulfill any of the following criteria:
  • Has conducted transactions in capital markets of not less than SAR 40 million in total and not less than ten transactions in each quarter during the last twelve months.
  • Holds net assets not less than SAR 5 million.
  • Works or has worked for at least three years in the financial sector.
  • Holds the General Securities Qualification Certificate "CME-1", which is recognized by the CMA.
  • Holds a professional certificate that is related to dealing with securities and accredited by an internationally recognized entity.

11. Any other persons prescribed by the CMA.

 

What are Nomu - Parallel Market's main characteristics?

  • Market with lighter requirements
  • Restricted to Qualified Investors
  • Possibility of transition to Main Market after obtaining needed approvals

What are the listing and offering requirements for Nomu - Parallel Market?

The Offering & Listing process takes the following criteria into consideration:

  • The issuer must be a joint stock company.
  • Minimum market cap of SAR 10 million
  • The issuer must float at least 20% of the issued shares at the same time of listing, or SAR 30 million worth of shares in the market, whichever is less.
  • Minimum 1 year of operational and financial performance
  • Appointing a financial advisor is mandatory, legal advisor is optional
  • Annual audited financial statements
  • Semi-annual* reviewed financial statements
  • Disclosure of material information
  • No profitability track record required
  • Lock up Period: 100% of pre-offering investor shares for one year
  • At least 50 public shareholders are required at the time of listing

*This change will be effective starting from 01/01/2020

Is Nomu- Parallel Market dedicated for SMEs?

Nomu - Parallel Market will open new investment opportunities to all types of companies – including SMEs - which play a key role in leveraging the national economy and accelerating development.

Who are Non-Resident Foreign Investors?

  1. Qualified foreign investors according to the Rules for Qualified Foreign Financial Institutions Investment in Listed Securities.
  2. The ultimate beneficiary in a Swap agreement with an authorized person.
  3. legal person allowed to open an investment account in the Kingdom and an account at the Depositary Center and is licensed or incorporated in a jurisdiction that applies regulatory and monitoring standards equivalent to those applied or accepted by the Authority in accordance with the list of jurisdictions issued by the Authority.
  4. Natural person holding the nationality of a country that applies regulatory and monitoring standards equivalent to those applied or accepted by the Authority in accordance with the list of jurisdictions issued by the Authority, and resides in such countries.

 

 

Which Markets can the Non-Resident Foreign investor trade in?

The Non-Resident Foreign Investor can trade only in Nomu – Parallel Market.

What are the procedures to open a Depository Center Account for Non-Resident Foreign Investor ?

An IFI can open a Depository Center account through the local Authorized Person after completing the following requirements:
• Fill the Edaa (Depository Center) account form.
• Copy of passport, certificate of incorporation, commercial register, or equivalent documentation.

 

How can the Exchange Member submit the Depository Center Account’s requirements?

The Authorized Person should send the requirements to the Edaa Center in both printed and electronic forms. The electronic copies should be sent to the following email address: cc@edaa.com.sa 

How are investment limitations of listed companies disclosed?

Investment limitations set forth in the articles of association (by-laws of the listed company, or any instructions issued by the supervisory or regulatory authorities to which the listed company is subject to), will be available under each issuer’s profile page; under the label “investment limits”. 

Where will foreign ownership information be available, and how frequent is it updated?

Foreign ownership information will be available on Tadawul website, and it will be updated on daily basis after market close.

How is foreign ownership information displayed on Tadawul’s website?

Foreign ownership reports will enclose:
Maximum ownership percentage per issuer and existing ownership percentage per issuer by all foreign investors.
 
The foreign ownership information can be found in the “Reports & Publications” web page, under the “Foreign Ownership”. 

What are Capped Indices?

Capped index has a limit on the weight of any single security within that index. Thus, a capped index sets a maximum percentage on the relative weighting of a component that is determined by its market capitalization. The rationale behind a capped index is to prevent any single security from having a dominating influence on an index.


Capped Threshold:
The maximum level at which the weight of a constituent can be at an index review.

Why is Tadawul introducing NOMU Capped Index?

Introducing index capping is a long term strategic decision by Tadawul in line with the international practices followed by global index providers as well as leading exchanges. Presently, NOMU – Parallel Market – has few stocks with dominant weights in the NOMU index that have a major impact on the index performance. By introducing the capped index, users will have an additional index that minimize this impact.

The existing NOMU index will continue to be available for market participants; whereas, the launch of capped indices will provide an alternate investment strategy to the local and international fund managers to benchmark their funds.

Which capped indices are being introduced?

Present launch is for NOMU Parallel Market Capped Index. This index is being launched with a capping threshold of 20%.

Kindly note that Tadawul has already introduced MT30 index with a capping threshold of 15%.

Who are the prime users of these indices?

Capped indices are mainly used by fund managers; however, in addition to fund managers, capped indices could be of interest to all members of the investment community, researchers and academics.

Would NOMU market capped index replace the existing index?

No. NOMU capped index will be a new index and will be the headline index for NOMU market. However, this index will not replace the existing NOMU market index, which will be available as earlier through Tadawul website and e-Reference portal

How are the capped indices calculated and rebalanced?

Capped indices at Tadawul will follow the same free float market cap weighted calculation methodology as is being used currently for all Tadawul market and sector indices. As part of the index maintenance, capped indices will be rebalanced on quarterly basis, aligned with the quarterly index maintenance cycle at Tadawul. For more details, please refer to the methodology section under the Knowledge Center on Tadawul website.

What is the Base Date and Base Value of the NOMU capped index?

Base date will be March 21st 2019 and Base Value will be closing index value for the same day.

What are the advantages of launching the capped index?

Capped indices provide an alternate investment strategy and a benchmark for the fund managers by reducing the concentration risk of the portfolio, arising due to overweight index constituent(s).

For the stock market in general, capped indices are known to reduce the index volatilities as the adverse influence of over-weight constituent(s) is contained.

Is the history index data available for NOMU capped index?

Yes, backdated index history dating back to January1, 2018 will be calculated and made available on the website.

Where is NOMU Capped Index displayed?

Capped index values will be published on Tadawul’s website, and made available via the services of Authorized Information Providers.

WHAT IS THE INVESTING CRITERIA FOR THE NATURAL PERSON AS NON-RESIDENT FOREIGN INVESTOR?

  • Has conducted transactions in capital markets of not less than 40 million Saudi riyals in total and not less than ten transactions in each quarter during the last twelve months.
  • Holds net assets of not less than 5 million Saudi Riyals.
  • Works or has worked for at least three year in the financial sector.
  • Holds the General Securities Qualification Certificate "CME-1", which is recognized by the CMA.
  • Holds a professional certificate that is related to dealing with securities and accredited by an internationally recognized entity.