The awkward sibling to Australia’s largest stock exchange could soon be mixing with a new crowd with the National Securities Exchange (ASX: NSX) commencing discussions with a Middle Eastern conglomerate to explore a new exchange in the Kingdom of Saudi Arabia. 

The discussions come in the form of a Memorandum of Understanding with Saudi-based Abilitii with the intention of establishing a new exchange to be known as the KSA Metals and Mining Exchange. It would be done as a secondary market to the existing exchange Tadawul. 

Unlike Tadawul, this potential joint venture exchange would be focused on mining issuer securities and Metals (Commodities) exchange, where NSX/Abilitii would need to secure a Market Operator Licence in the Kingdom of Saudi Arabia. By partnering with NSX, the Australian operator would bring the know-how in technology, compliance and operations around regulated securities exchanges that Abilitii would not have on their own. 

“We are excited by this venture, and the opportunity to develop a commodities and securities exchange in the Kingdom of Saudi Arabia. We are honoured to be signing this MOU with our partners Abilitii, which is a first step in NSX plans to provide additional exchange services in other parts of the world to enhance its business operations,” said NXS Managing Director, John Karantzis. 

Abilitii is one of the largest private sector conglomerates in the Middle East region, employing more than 10,000 people in more than 10 countries and across 70 companies. The company was originally founded in 1979 as a textiles business but has continued to grow and diversify to now be major players in real estate in Saudi Arabia, alongside a portfolio of investments in the infrastructure, resource and financial sectors. 

With their major footprint across the Middle East, Abilitii would bring with them a large network of companies that would potentially look to list on the secondary exchange, while flagging intentions to take a significant equity stake in the Exchange and its potential customers also. 

“Abilitii is honoured with this agreement, which aims to support the program’s strategy to transform the Kingdom into a leading industrial power, increasing the economic impact of the mining sector and the sustainability of its growth, and creating an attractive investment environment, in a way that contributes to the goals of 2030 Vision,” said Abilitii Deputy Chairman, Mr Mohammed. 

With the MOU signed, the next step will be for Abilitii and the NSX to develop a business plan, agree on a financial model and agree on potential joint venture agreement terms. 

In 2019, the gross domestic product (GDP) for the Kingdom of Saudi Arabia was USD $793 billion from a population of about 34 million. The economy is hugely dependent on oil production which accounts for 62% but In 2016, the Saudi Government launched its Saudi Vision 2030 to reduce the country’s dependency on oil and diversify its economic resources. 

As well their experience operating the National Securities Exchange in Australia where it domiciles 60 publicly-listed companies with an average market cap of $50m, the NSX also provides securities exchanges services to the SPX in Fiji.