RIYADH, Nov 1: Saudi Arabia will have its first official stock exchange, enjoying a fully autonomous status, by February next year.

The long awaited capital market law Saudi Arabia, after ratification by the Saudi monarch King Fahd has now been published in the official gazette, paving way for the establishment of the first official stock exchange in the Kingdom. It is widely anticipated that the official stock exchange would ensure discipline in the highly speculative Saudi bourses.

Saudi economist Ihsan bu Hulaiga was quoted in the regional press as saying that the “project is not a mere stock market, it is much more significant than that it will involve numerous benefits, including reducing inside trading, bringing in new investment instruments such as bonds, and supporting the privatization process.

The proposed stock exchange, which was finally approved by the Shoura Council (the Saudi consultative council) this year after prolonged and heated debates, will be run by a five-member commission, which will be fully independent and has no other business commitments. It is thus expected that the decisions of the commission will be neutral and impartial.

Bu Hulaiga believed that the market having an electronic trading system and would give a strong push to share dealing in the Kingdom, which already has the biggest and busiest stock market in the Middle East in terms of turn-over and capitalization.

“It will lead to a large increase in the number of listed companies while it will also benefit the domestic economy by creating the right climate for privatization and other reforms on the other hand, privatization programmes will also benefit the market as this means growth in share dealing and expanded investment opportunities,” he said.

“The government also expects it to be a major channel for national savings but I think it will be a wise decision to open it up for all investors, including foreigners. This means the Kingdom could be turned into a major financial centre in the region.

Saudi Arabia has by far the biggest stock exchange in the Middle East as the market capitalization of the nearly 70 listed companies accounted for almost half the total Arab market capitalization in June.

During the first nine months of this year, the market skyrocketed to its highest levels because of strong corporate results, economic reforms and high oil prices.