Frequently Asked Questions
- What is Nomu - Parallel Market?
- Why is Tadawul creating Nomu - Parallel Market?
- What are the differences between the Main Market and Nomu - Parallel Market?
- Who can invest in Nomu - Parallel Market?
- What are Nomu - Parallel Market's main characteristics?
- What are the listing requirements for Nomu - Parallel Market?
- Is Nomu- Parallel Market dedicated for SMEs?
- Who are Non-Resident Foreign Investors?
- Which Markets can the Non-Resident Foreign investor trade in?
- What are the procedures to open a Depository Center Account for Non-Resident Foreign Investor ?
- How can the Exchange Member submit the Depository Center Account’s requirements?
- How are investment limitations of listed companies disclosed?
- Where will foreign ownership information be available, and how frequent is it updated?
- How is foreign ownership information displayed on Tadawul’s website?
- What are Capped Indices?
- Why is Tadawul introducing NOMU Capped Index?
- Which capped indices are being introduced?
- Who are the prime users of these indices?
- Would NOMU market capped index replace the existing index?
- How are the capped indices calculated and rebalanced?
- What is the Base Date and Base Value of the NOMU capped index?
- What are the advantages of launching the capped index?
- Is the history index data available for NOMU capped index?
- Where is NOMU Capped Index displayed?
- What is the investing criteria for the Natural Person as Non-Resident Foreign Investor?
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%|
|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 and year-end financial statements within 90 calendar days from the end of the period||
Lighter financial disclosure requirements (with regards to time permissible to disclose)
|Daily Fluctuation Limits||±10%||±20%|
Who can invest in Nomu - Parallel Market?
Given Nomu – Parallel Market is restricted to Qualified Investors, Authorized Persons (APs) must determine who is eligible. For the purpose of Nomu – Parallel Market and Nomu - Parallel Market offering, Qualified Investors are defined as per the below criteria:
- Authorized Persons act for their own account
- Clients of a person authorized by the Authority to conduct managing activities provided that this Authorized Person has been appointed as an investment manager on terms which enable it to make 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
- The Government of the Kingdom, any government body, any supranational authority recognized by the Authority or the Exchange, and any other stock exchange recognized by the Authority or Securities Depository Center Company (“Edaa”)
- Government-owned companies either directly or through a portfolio managed by a person authorized to carry out managing activities
- Companies and funds established in a member state of the Cooperation Council for the Arab States of the Gulf
- Investment Funds
- 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.
- Qualified foreign financial institutions
- Any other legal persons allowed to open an investment account in the Kingdom and an account at Securities Depository Center Company (“Edaa”)
- Natural persons allowed to open an investment account in the Kingdom and an account at Securities Depository Center Company (“Edaa”), and fulfill any of the following criteria:
- has conducted transactions in security 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.
- his net assets is 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 which is recognized by the Authority "CME-1".
- holds professional certificate that is related to securities business and accredited by an internationally recognized entity.
11.Any other persons prescribed by the Authority.
What are Nomu - Parallel Market's main characteristics?
- New market with lighter requirements
- Restricted to Qualified Investors
- Possibility of Transition to Main Market after new filing process with the Capital Market Authority (CMA)
What are the listing requirements for Nomu - Parallel Market?
Offering to Qualified Investors takes place first, then listing is conducted. The Offering and Listing process takes the following criteria into consideration:
- The issuer must be joint stock company.
- Minimum market cap of SAR 10 million
- At least 20% of the class of shares that are the subject of the application will be owned by the public at the time of listing
- Minimum 1 year of operational and financial performance
- Financial advisor mandatory, legal advisor optional
- Annual audited financial statements
- Quarterly 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
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?
- Qualified foreign investors according to the Rules for Qualified Foreign Financial Institutions Investment in Listed Securities.
- The ultimate beneficiary in a Swap agreement with an authorized person.
- 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.
- 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: email@example.com
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?
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.
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 security 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.
- The average size of securities’ portfolio shall exceed 10 million Saudi riyals during the last twelve months.
- Holds a professional certificate in securities recognized by the Authority or an internationally certified jurisdiction.