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Test Your Knowledge in Derivatives

Derivatives

The launch of the Derivatives Market is one of the key initiatives of the Financial Sector Development Program (FSDP) under the Kingdom’s Vision 2030. The Derivatives Market enhances the Saudi Exchange’s product offering and complements recent additions to financial market infrastructure. Below, you will find more information about the market’s characteristics.

Market Watch Today Rules and Guidance

Contract Specifications

Video Resources

  • What is the Derivatives Market?

  • How to Trade Index Futures?

  • How to Trade Single Stock Futures (SSFs)?

  • What is Singe Stock Options?

  • How to Trade Single Stock Options?

Key Links

Exchange Traded Instruments

Opening Days Opening
Auction		 Continuous
Trading		 Closing
Auction		 Settlement
Cycle		 Minimum
Lot		 Transaction
Cost*		 Security
Format
Index Futures
Sunday - Thursday 09:00–09:30 09:30– 15:30 Last Traded Price T+0 One contract SAR 25 per contract Electronic Form
Single Stock Futures
Sunday - Thursday 09:00–09:30 09:30– 15:30 Last Traded Price T+0 One contract 2.5 Bps per transaction value Electronic Form
Single Stock Options
Sunday - Thursday 09:00–09:30 09:30– 15:30 Last Traded Price T+1 One contract SAR 2 per contract Electronic Form

*Excludes brokerage fees

Negotiated Deals

Negotiated Deals occur when both sellers and buyers determine the quantity and price of the Listed Derivatives Product contract involved in the transaction.

Product Minimum trade size
MT30 Index Futures SAR 1,000,000
Single Stock Futures SAR 1,000,000
Single Stock options SAR 1,000,000

Derivatives Market Features

Opening Price:
Open of the market takes place by an auction for Futures Contracts. The auction shall be based on the bids and asks entered during the Opening Auction. The market will open and uncross on a variable basis between 09:30:00am and 09:30:30am every trading day.

Closing Price:
Last Traded Price

IntraDay:
Matching takes place based on price and time priority.

Daily settlement price :
The Daily Settlement Price of the Futures Contracts is calculated based on a methodology determined and disclosed by the Exchange in the Listed Derivatives Products Specifications.

Theoretical Future Price calculation:

 

Where:
Spot - Spot/underlying price
r - interest rate
TTE - time to expiry in years

Final settlement price:
The Final Settlement Price of the Futures Contracts is calculated based on a formula determined and disclosed by the Exchange in the Listed Derivatives Products Specifications.

Tick Sizes:
Minimum price fluctuation of the Futures Contract will be specified by the Exchange in the Listed Derivatives Products Specifications.

Settlement Type:
Cash Settlement: Does not require delivery of the underlying instrument upon exercise.
Physical Settlement: Requires delivery of the underlying instrument upon exercise

Exercise type:
American style: Options contracts can be exercised any time before the expiration date.
European style: Options contracts can only be exercised on the expiration date.

Options type:
Call Options: gives the right, not the obligations to the buyer of the Call Options to buy the underlying asset and require the seller to sell the underlying asset upon request by the buyer of the Call Options at the Strike price for the duration of the Options contract.
Put Options: gives the right, not the obligations to the buyer of the Put Options to sell the underlying asset and require the seller to buy the underlying asset upon request by the buyer of the Put Options at the Strike price for the duration of the Options contract.

Fluctuation Limits:

Derivatives Market
  Futures Options
Daily Upper Limit +20% from previous day’s closing No Limit
Daily Lower Limit -20% from previous day’s closing No Limit

Derivatives Underlying :

Product Underlying
MT30 Index Futures MT30 (MSCI Tadawul 30)
Aramco Futures and Options Aramco
AlRajhi Futures and Options AlRajhi
Alinma Futures and Options Alinma Bank
SABIC Futures and Options SABIC
Saudi Telecom Co. Futures and Options Saudi Telecom Co.
Saudi Kayan Futures and Options Saudi Kayan
Saudi Electricity Futures and Options Saudi Electricity
Almarai Futures and Options Almarai
Maaden Futures and Options Maaden
SNB Futures and Options SNB

Contract Months and Year Code:
Example of a Futures contract code would be: (Contract Code + Futures + Expiry Year + Expiry Month)
Index Futures: (SF30 + 3 + M)
Single Stock Futures: (ARM + F + 3 + M)
Example of an Options contract code would be: (Contract Code + Options + Expiry Year + Expiry Month + Strick Price + Call/Put)
Single Stock Options: (RJH + O + 3 + M + 130 + C/P)

Month Month Code
January F
February G
March H
April J
May K
June M
July N
August Q
September U
October V
November X
December Z
Year Year Code
2022 2
2023 3
2024 4
2025 5
2026 6

Corporate action codes:
In case of corporate action, the long name of contracts post Corporate action will contain the below codes in the following sequence:

# OF CORPORATE ACTION CODE
First Corporate action X
Second Corporate action Y
Third Corporate action Z
Forth Corporate action Q
Fifth Corporate action R

Accessibility by Market participant

‘Onshore’ investors

Asset Classes Secondary
market access
channel		 Voting rights Public
offering
participation		 Private
placement
participation		 Capital
gains tax/zakata		 With-holding
tax		 Other
restrictions
Saudi investors
Derivatives Direct Access No No No 0% 0% Not Applicable
Resident foreign investors & gcc resident investors
Derivatives Direct Access No No No 0% 0% Not applicable
Offshore’ investors
Derivatives Direct Access No No No 0% 0% Not Applicable
Non-resident foreign investors
Derivatives Direct Access No No No 0% 0% Not Applicable

Post-trade features

Item Description
Clearing Members General Clearing Member (GCM) and Direct Clearing Members (DCM) connected to Muqassa
Settlement Mode Cash Settlement
Settlement Currency All transactions are settled in Saudi Riyals.
Settlement Cycle Contract are Marked to Market on a daily basis.
Margins Initial Margin, Variation Margin, Add-on Margins.
Short Selling Short selling is embedded in Derivatives market products.

Derivatives Exchange Membership Fees

Service Fees(SAR)) Frequency
Derivatives Membership Fees
Application fee 30,000 One time
Annual membership 10,000 Annual
Other Derivatives Membership Fees
Trading Workstation Usage fees for new members per station 11,700 One time
Annual Trading Workstation Usage fees per station 3,650 Annual

Frequently Asked Questions

WHAT ARE THE TYPES OF DERIVATIVES PRODUCTS?

There are two main types of derivatives products:

  • Exchange traded: which include futures and options and are only trade on regulated exchanges.
  • Over the Counter (OTC): which include Forwards and swaps and are not traded on a regulated exchange.
ARE DERIVATIVES PRODUCTS RISKY?

Like any other security, knowledge is key to start trading. Derivatives are perceived as more complex and sophisticated products that require deeper knowledge of uses, risks, and benefits.

WHY TRADE DERIVATIVES?

Derivatives products are alternative trading instruments that offers trading and hedging opportunities for clients.

Derivatives offer embedded features in their products such as short selling and leverage.

WHAT ARE DERIVATIVES?

Derivatives are contracts between two parties, whose terms & conditions are set today, to deliver a certain asset at a future date.

From its name Derivatives are contracts that derive their price from an underlying which can be stock, index, etc.

Meeting Request

Are you interested to learn more about Derivatives? Please request a meeting NOW with one of our experienced professionals!!

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