POWERING THROUGH

The stock exchange domain is by nature highly information technology intensive. The importance of timely and accurate information, systems stability and availability, for issuers, members, investors, and other market participants cannot be overstated.

Tadawul’s IT strategy is closely intertwined with the corporate strategy. All the IT initiatives are embedded within corporate strategic pillars and have been crafted to play a major role as enablers to the Stock Exchange. Since the Exchange is in a rapidly growing phase, major technology infrastructural enhancements have been done not just catering to current needs, but anticipating future growth as well.

Technology made a major contribution to the landmark event of the year, the Aramco listing. Planning and preparatory work for the initiative continued for a period of about two years prior to the event. Major technology enhancements were applied to all Tadawul systems and infrastructure to accommodate the massive expected increase in market activities and volume. Using Tadawul’s Quality Assurance & Readiness Framework, all technology changes went through an intensive testing and readiness exercises, with the participation of all stakeholders. Despite the demands of such a massive undertaking, other major technology initiatives such as Post-trade Technology Program (PTTP) and Tadawul New Data Centre setup ran in parallel as planned.

Tadawul entered into an agreement with Nasdaq in 2017, for the US exchange to migrate its post-trade technology inclusive of registry, depository and risk management systems. It will also include cash and derivative clearing systems which bring Tadawul’s infrastructure in line with those of global stock markets. The agreement includes provision of a new counterparty clearing solution. The new technology will also facilitate introduction of new asset classes and new services to investors by both Tadawul and market participants. This massive programme is due to continue into 2021.

Developments completed in the post-trade area have included infrastructure setup and configuration, development of data migration plan and members’ readiness plans. Early customer testing and data migration for same have also been completed.

A major development that is targeted for Q2 2020 is the launching of the derivatives market. Derivatives include a large number of different products such as index futures, options, and commodities. The business processes involved differ substantially from those of normal trading. The derivative application was integrated with the Tadawul website to extract and display the derivative market information, smoothen the user experience, facilitate trading and prudently manage risk exposures. Multiple rounds of testing for derivative-related applications were completed to ensure reliability of the new developments. The dry run and rehearsal activities were also concluded.

The development of the market, as well as requirements of regulators, brings new information requirements in its wake. A major effort was also mounted to upgrade the information services and data analytics to be on a par with global standards and best practices. The objective was to provide the information relevant to each user group as comprehensively as possible and make it easily accessible. The features of the Tadawul website were enhanced to make the site a valuable source of market information. The subsidiaries’ websites were also developed and launched. Partnerships with other organizations were entered into and leveraged where they would add value.

Since adoption of International Financial Reporting Standards (IFRS) is now mandatory for listed companies in the Kingdom, the Disclosure Project, which facilitates financial reporting in accordance with IFRS was implemented.

The following enhancements were carried out in the Ifsah and Tadawul websites:

• Functional features of the websites were enriched as part of the Nomu – Parallel Market disclosure initiative.
• Developments to the websites in introducing Nomu REITs and Nomu Closed Ended Funds.
• Improvements to facilitate foreign companies listing on Tadawul.

Similar changes were made to support a new release of the trading system, and to also support foreign companies listing in Tadawul. A dedicated web service was developed, the main user of which will be the Capital Market Authority (CMA), to gather business and financial information in digital XBRL format.

The Tadawul website was also upgraded to display ETF information in accordance with global standards. The Exchange is planning to jointly develop data services and indices, in a partnership with IHS Markit. As a preparatory step a new Sukuk Price Delivery Report has been produced as a base for index calculation. Tadawul Incident Ticketing and Services Request Portal (MyIT) services were enabled for participants.

The challenge we had to face was to meet a plethora of new requirements and consequent changes in infrastructure, systems and services. The enhancements and upgrades impacted almost all aspects of the existing technology. Changes had to be accomplished without any disruption to the existing functions whilst maintaining full system availability. Furthermore, all new systems had to be brought on-stream with adequate testing to ensure their accuracy and reliability.

Hardware development has kept pace with the demands of new applications and increased volumes during the last few years while achieving the necessary performance standards. Cutting-edge technology has been leveraged to cater to the needs of trading systems, storage and backup, network and network security. Network upgrades have included firewalls and switches using the most secure technologies. These developments have also optimized the capacity of our Data Centre. Despite all the increasing demands, the performance and processing time has improved remarkably; concurrently the maintenance and downtime has been reduced. Both core and non-core systems have achieved 100% system availability.

The achievements of our Operations and Information Technology Department are a tribute to the stringent planning process and the dedication, knowledge and professionalism of our staff and rigorous adaptation of international ISO standards.

There have also been several significant achievements in the areas of IT security and governance. Annual surveillance was successfully completed on ISO 9001:2015 and ISO 20000:2011 standards by a global certified audit and inspection entity. On an ongoing basis we conduct continuous reviews and enhancements for all IT and Operations policies and processes to ensure that we are aligned with international ISO standards. Several enhancements to security systems also ensured compliance with cybersecurity policies and National Cybersecurity Authority (NCA) regulations. Multiple test activities were conducted, with the participation of members, to ensure the readiness and continuity of the business. System developers coordinated with information security to conduct multiple penetration testing for all major system changes. A number of sessions were conducted for the IT and Operations staff to promote their awareness of risk and information security.