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Frequently Asked Questions

What are Exchange Traded Funds (ETFs)?

ETFs are investment funds that track a certain underlying asset or assets, and is divided into equal units that are traded on the exchange during official trading hours.

ETFs enjoy advantages of mutual funds in terms of diversification and stocks in terms of trading specifications.

What are the main features of (ETFs)?

1. Flexibility: ETFs are traded like any listed security during official trading hours.
2. Transparency: Information on the basket of securities, and Indicative Net Asset Value (iNAV) is readily available.
3. Liquidity: Market Makers provide bid and ask quotes to enhance liquidity.

How are (ETFs) Traded?

ETF units can be traded like any other security through Exchange members during trading hours. Also, units can be created and redeemed through the Market Maker or any other authorized party (e.g. large institutional investors).

What is the mechanism for determining the unit price in ETFs?

Market Makers provide bid and ask quotes for ETFs close to their Indicative Net Asset Value (iNAV).

How can one invest in ETFs?

Similar to investing in exchange traded securities, there are two ways to invest in ETFs.
One: During the IPO stage (primary market).
Two: Through the financial market (secondary market).

What are the benefits of investing (ETFs)?

In general, the investors could gain from the increase of the value of the underlying assets of the ETF in addition having the benefits of portfolio diversification, risk management, lower costs, trading flexibility and the availability of dividend distribution.

Who will be the fund manager for the ETF?

Authorized persons licensed by the Capital Market Authority (CMA) in Asset Management.

Are (ETFs) limited to Stocks only?

ETFs underlying are not limited to stocks only, they may also include other financial instruments such as bonds and sukuks or commodities such as gold and silver.

Are there any limits to the ownership of (ETFs)?

There are no ownership limits related to ETFs

Is there any upper or lower limits on the number of (ETFs) units that an investor can buy or sell?

The minimum unit an investor can purchase over the exchange is one unit, while upper limit ownership limits are not applicable

What is the total trading commission of ETFs?

The maximum trading commission on Saudi Exchange is 15.5 basis points.

Is the ETF unit price of the ETF equal to its NAV?

The trading price of ETFs units is subject to supply and demand. While the total Net Asset Value (NAV) of the unit represents the market value of assets consisting of the ETFs unit. Trading of ETFs units happens at a price close to the Net Asset Value (NAV).

Is there a relation between (ETFs) performance and the performance of the underlying asset of the (ETF)?

The ETF performance is bound to the index that the ETF is tracking. Also, the pricing of the ETF units is based on the NAV not the price of its constituents.

Will the terms and conditions for ETFs be issued before they are launched and traded in the primary and secondary markets?

Yes, as the fund manager is bound by the conditions of the Capital Market Authority Regulation of Investment Funds, including disclosing the terms and conditions of the fund and is obligated to publish them in an appropriate period before the fund is offered to the public

How are (ETF) units priced in the secondary market?

The ETF will be priced at NAV upon listing on the secondary market, then going forward ETF unit price will be determined by the market forces (supply and demand).

Do (ETF) owners have the right to attend assemblies and vote?

The unitholder shall be entitled to exercise all rights in relation to the units (including, but not limited to, the right to vote at meetings of unitholders)

Are all investor categories and nationalities allowed to invest in (ETFs)?

Yes, ETFs is available to all categories of investors who are authorized to trade in the Exchange.

What are the risks of investing in (ETFs)?

They are the market risk of the underlying assets

What is meant by the bilingual disclosure by Issuers, and when will it be enforced?

It is meant that to disclose in both Arabic and English languages ​​for all disclosures published on the Saudi Exchange website. It is imposed starting from January 1, 2021.

Is bilingual disclosure in both Arabic and English is mandatory for all issuers whose securities are listed on the main market?

Yes, it is mandatory for all listed securities in the main market for all disclosures and reports published on the Saudi Exchange website through the designated system that the market determines for this purpose in accordance with the listing rules.

Is the bilingual disclosure in both Arabic and English mandatory for all issuers whose securities are listed on the parallel market "Nomu"?

For all listed securities in the Parallel Market (Nomu), disclosure will be mandatory in Arabic language, and the Issuer can translate any of that to English for all disclosures and reports through the designated system that the market determines for this purpose in accordance with the listing rules.

What is the purpose of mandating bilingual disclosure in both Arabic and English languages?

This change aims to improve the means of disclosure and provide the necessary tools to enable investors to reach to all the information that helps them in making their decisions and to raise the level of transparency and disclosure in the market in line with the Kingdom's Vision 2030 and the financial sector development program, one of it’s approved pillars is the development of an advanced financial market and to provide equal opportunities for all types of investors to reach the disclosures published on the Saudi Exchange website.

What is meant by bilingual disclosure of reports?

It means all the reports that are published by the Issuers in accordance with the relevant rules and regulations.

What are the main requirements that the Issuers must comply to with regard to disclosure in Arabic and English?

The disclosure should be clear, correct and not misleading, and that it fulfills all the disclosure requirements stipulated in Chapter Five of the Listing Rules for Continuing Obligations, Regulations, Implementing Regulations and Market Rules, as all the rules and regulations are published in both languages.

What are the obligations of the liaison officer authorized by the issuer to disclose information?

To be a holder of professional certificate of disclosure.

To be aware of all relevant rules, regulations and market rules and to fully comply to it.

The disclosures and reports are submitted through the submitter and then approved by the supervisor to ensure the quality of the information provided to the public.

Does the designated system specified in the listing rules for disclosure enable Issuers to submit bilingual disclosure in both Arabic and English?

Yes. The designated system for disclosure enables all Issuers to publish all disclosures in both Arabic and English in an easy and accessible method, and helps Issuers to disclose in both languages.

How can the investor view and read the disclosures or reports published in the English language?

All announcements published in English will be available on the Saudi Exchange website in the English version and on the company profile page as well.