Saudi Depositary Receipts

Introduction

The Saudi Exchange has introduced a new financial instrument that enables investors in the Saudi capital market to access shares of foreign companies listed in global markets with ease. Through the launch of Saudi Depositary Receipts (SDRs), the Saudi Exchange aims to enhance the attractiveness and competitiveness of the Saudi capital market for both local and international investors, further positioning the Kingdom as a leading global financial hub.

What are a Saudi Depositary Receipts? (SDRs)

SDRs are financial instrument listed on the Saudi Exchange, allowing investors in the Saudi capital market to access shares of foreign companies listed on international exchanges, without the need for a foreign investor account.

SDRs enable local and international investors to buy and sell shares of non-Saudi companies directly in Saudi Riyals, just like any other listed security on the Saudi Exchange. They are issued by a licensed depositary institution, registered through the Securities Depository Center (Edaa), and cleared by the Securities Clearing Center (Muqassa).

In addition to providing seamless access to global equities, SDRs offer enhanced liquidity and flexibility. Investors can convert SDRs into the underlying shares on the foreign exchange, enabling cross-border trading.

Why invest via Saudi Depositary Receipts?

Saudi Depositary Receipts provide a streamlined way for investors to access shares of foreign companies through the Saudi Exchange, with transactions settled in Saudi Riyals. Investors receive the same rights as shareholders in the underlying company, including voting rights and dividends. SDRs enable portfolio diversification by offering exposure to international companies, while also minimizing currency risk through local currency settlement. Being fully fungible, SDRs allow smooth conversion between local and home markets.

Features of Saudi Depositary Receipts (SDRs)?

Saudi Depositary Receipts are considered to be similar to ordinary shares

• SDRs are like other Saudi Exchange listed equities and are traded on the Exchange. 

• SDRs are subject to the same trading mechanics that are applicable to ordinary common equities in the Saudi Market.