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Saudi Stock Exchange Joins MSCI Emerging Market Index

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Saudi Stock Exchange Joins MSCI Emerging Market Index

Inclusion in global indices reflects continued progress of capital market reform under Vision 2030 

RIYADH– The Saudi Stock Exchange (Tadawul) is pleased to announce today that MSCI, a leading provider of global equity indices, upgraded the Kingdom of Saudi Arabia to “Emerging Market” from its previous “Standalone Market” status in its Annual Market Classification Review.

The Kingdom, which was also recently added to the FTSE Russell as a “Secondary Emerging” market in March 2018, will be included in MSCI’s Emerging Market Index in two phases concurring with the May 2019 Semi Annual Index Review and the August 2019 Quarterly Index Review.

In its decision, MSCI cited the further market enhancements introduced by Tadawul and the Kingdom’s Capital Market Authority (CMA) during the past year since being added to MSCI’s Emerging Market Index Watch List last June. Many of those developments have fulfilled criteria set by the MSCI Market Classification Framework that must be met in order for a market to be classified as Emerging Market in its indices. The Saudi Arabia Index, with 32 securities, is expected to have a weighting of 2.6 % within the MSCI Emerging Markets Index.

His Excellency Mohammed El-Kuwaiz, Chairman of the Capital Market Authority (CMA) commented:

“The inclusion decision shall enhance the diversity of the investors’ base as well as the liquidity of the Saudi Capital Market. We, at the CMA, will continue to further develop the Saudi Capital Market to ensure that the market facilitates investments, promotes confidence and protects investor and market participants.”

“Today’s announcement from MSCI, so close on the heels of KSA’s reclassification in the FTSE Russell Global Equity Index Series, marks the further integration of the Kingdom into global capital markets,” said Sarah Al Suhaimi, Chairperson of Tadawul. “It is the culmination of Tadawul’s ongoing efforts to work closely with Saudi regulatory authorities and leading emerging market investors to implement far-ranging reforms and market enhancements to strengthen the effectiveness of the Saudi capital market and foster an attractive investment climate for local and international investors. We are proud that these efforts have gained Saudi Arabia inclusion in the leading global indexes and benchmarks.”

“Inclusion in the MSCI Emerging Market Index is an important milestone and further affirmation of the tremendous progress Tadawul has made in the past year in broadening investor access to the Saudi capital market, enhancing market efficiency and further aligning market practices with global best practices,” said Khalid Al Hussan, Chief Executive Officer of Tadawul. “Our work is never done, and additional market enhancements are in the pipeline as we continue to strengthen and grow investor confidence in the Saudi market.”

 The Road to MSCI Emerging Market Index Inclusion

Saudi Arabia was added to the MSCI Emerging Market Index Watch List in June 2017. In its February 2018 Consultation on the proposed reclassification of Saudi Arabia to Emerging Market, MSCI highlighted the Kingdom’s progress in implementing positive market reforms across a range of market accessibility criteria, including foreign ownership limits, easing of registration requirements for Qualified Foreign Investors (QFIs), enhancements to the clearing and settlement process and introduction of securities lending and short selling. Since then, Tadawul and the CMA have continued to move ahead with implementation of significant market reforms and enhancements as part of the Kingdom of Saudi Arabia’s Vision 2030 economic transformation program, which in part seeks to bring the Saudi market into alignment with its emerging and developed market peers. Measures announced to be implemented since the beginning of 2018 include:

  • Establishing a Central Counterparty Company (CCP) in May 2018 to develop future clearing services and pave the way for derivatives trading and other new asset classes, to be fully operational by the second half of 2019.
  • Listing and trading Government debt instruments accessible to all eligible investors as of April 2018, to further strengthen the Sukuk and Bond market by creating a yield curve.
  • Implementing changes to the opening and closing price mechanism to introduce greater price efficiency, increased liquidity, reduced market volatility and enhanced security and a more attractive investment climate for domestic and international investors. The enhancements, which took effect on May 27, 2018, include:
    • Moving from a Volume Weighted Average Price (VWAP) to an auction method for determining closing prices for both the Main Market and Nomu parallel market;
    • Enhancing the opening price auction in line with practices adopted by most other major markets.
  • Updating the Independent Custody Model (ICM) as of January 2018, to enhance Qualified Foreign Investor access to the market by providing more flexibility in trading limits for ICM clients. Along with this change, new procedures were introduced to mitigate credit risk associated with the settlement process for all participants
  • Introducing a new optional model for structure of accounts (segregated accounts) to allow asset managers to aggregate the orders of managed assets (discretionary portfolios – “DPs” – and investment funds) in January 2018. This development assures best execution and fair allocation for asset managers and their clients.
  • Implementing a Market Making (MM) Program based on global best practices to enhance liquidity, facilitate orderly price formation, reduce price volatility, fortify the sukuk, bond and ETF markets and pave the way for Exchange Traded Products (ETP) and derivatives. MM program is also expected to be implemented during the second quarter of 2018.

Key reforms previously implemented include:

  • Amending the settlement cycle to T+2 for all listed securities to increase the level of asset safety for investors and to unify the settlement duration for all types of listed securities. The amendment of the settlement cycle brings the Saudi Market in alignment with the standards set by other international exchanges. In addition, securities borrowing and lending and short selling were introduced for all listed stocks. These changes went live in April 2017.
  • Dropping the cash prefunding requirement for specific investors, leaving the timing of cash availability to the contractual terms between the Authorized Person and the investor. This will align trading practice with good international standards, and standardize institutional investors’ trading processes especially investment funds.
  • Introduction of Fails Management Controls that is offered by the Securities Depositary Center (SDC) for executing brokers to cover securities shortage by transferring securities from the principle account, borrowing securities via SBL function, buying securities on open market, or preforming optional Buy-in. Also, mandatory Buy-in can be conducted by SDC.
  • Introduction of a Delivery versus Payment Model(DvP) to comply with the principle of DvP, wherein the delivery of securities occurs only if the corresponding payment occurs.
  • Enhancements to the Independent Custody Model which enable custodians to reject the settlement of unconfirmed trades executed by the executing brokers in April 2017.
  • Introduction of Securities Borrowing & Lending and short selling: Tadawul is the first market in the region to offer Securities Borrowing and Lending and covered short selling for all listed stocks.
  • Adoption of new corporate governance rules issued by the Saudi Capital Market Authority (CMA) in February 2017. The rules enhance the rights of shareholders and board members and provide greater clarity and more transparency around determining commercial strategic planning, roles, responsibilities and oversight of corporate entities and third parties.
  • Permitting QFIs to participate in IPOs, a change that was instituted in January 2017.
  • Introduction of Nomu, a parallel equity market for Qualified Investors that offers lighter listing requirements and serves as an alternative platform for companies to go public. The Nomu-parallel market was launched in February 2017.
  • The introduction of Real Estate Investment Traded Funds (REITs) to further diversify the availability of investment opportunities and promote investment in real estate for all market participants.
  • Selection of NASDAQ as the solution provider to implement a new post-trade technology which will replace Tadawul’s current registry, depository, clearing and settlement solution with a state of the art solution.
  • Spin-off of the Securities Depository Center (Edaa), which has been operational since January 2017 and is fully owned by Tadawul.
  • Conducting Investor relations workshops and partnerships to develop and facilitate communication between listed companies, financial market stakeholders, financial analysts and legislative and regulatory bodies in the Kingdom. Tadawul also is keen on implementing investor relations global best practices and enhancing transparency across all listed companies.

QFI Program

Saudi Arabia’s QFI Program was introduced in June 2015 to facilitate participation by international investors in the Saudi capital market. The QFI Program was enhanced in 2016 and again in January 2018 to further ease the qualification requirements for qualified foreign investors and expand the range of institutional investors eligible for the program. Through the QFI program, international investors now have direct and full access to Tadawul, the largest equity market in the GCC and MENA regions with a market capitalization of $522 billion[1], and average daily trading value of nearly $972.6 million as of May 2018[2]. QFI qualifying criteria and foreign ownership limits were recently eased and the Saudi IPO market is now open to QFIs.

Since inception of the QFI program, over 150 international financial institutions have joined with more than 200 others at various stages in the qualifying process. As of January 2017, QFIs can participate in all Saudi domestic IPO offerings. This accelerated growth in the QFI program reflects the progress that Tadawul has made in aggressively moving forward with several initiatives to reform the exchange and attract foreign capital.

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U.S. inauguration turns poet Amanda Gorman into best seller

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U.S. inauguration turns poet Amanda Gorman into best seller 1

WASHINGTON (Thomson Reuters Foundation) – The president’s poet woke up a superstar on Thursday, after a powerful reading at the U.S. inauguration catapulted 22-year-old Amanda Gorman to the top of Amazon’s best-seller list.

Hours after Gorman’s electric performance at the swearing-in of President Joe Biden and Vice President Kamala Harris, her two books – neither out yet – topped Amazon.com’s sales list.

“I AM ON THE FLOOR MY BOOKS ARE #1 & #2 ON AMAZON AFTER 1 DAY!” Gorman, a Los Angeles resident, wrote on Twitter.

Gorman’s debut poetry collection ‘The Hill We Climb’ won top spot in the online retail giant’s sale charts, closely followed by her upcoming ‘Change Sings: A Children’s Anthem’.

While poetry’s popularity is on the up, it remains a niche market and the overnight adulation clearly caught Gorman short.

“Thank you so much to everyone for supporting me and my words. As Yeats put it: ‘For words alone are certain good: Sing, then’.”

Gorman, the youngest poet in U.S. history to mark the transition of presidential power, offered a hopeful vision for a deeply divided country in Wednesday’s rendition.

“Being American is more than a pride we inherit. It’s the past we step into and how we repair it,” Gorman said on the steps of the U.S. Capitol two weeks after a mob laid siege and following a year of global protests for racial justice.

“We will not march back to what was. We move to what shall be, a country that is bruised, but whole. Benevolent, but bold. Fierce and free.”

The performance stirred instant acclaim, with praise from across the country and political spectrum, from the Republican-backing Lincoln Project to former President Barack Obama.

“Wasn’t @TheAmandaGorman’s poem just stunning? She’s promised to run for president in 2036 and I for one can’t wait,” tweeted former presidential candidate Hillary Clinton.

A graduate of Harvard University, Gorman says she overcame a speech impediment in her youth and became the first U.S. National Youth Poet Laureate in 2017.

She has now joined the ranks of august inaugural poets such as Robert Frost and Maya Angelou.

Her social media reach boomed, with her tens of thousands of followers ballooning into a Twitter fan base of a million-plus.

“I have never been prouder to see another young woman rise! Brava Brava, @TheAmandaGorman! Maya Angelou is cheering—and so am I,” tweeted TV host Oprah Winfrey.

Gorman’s books are both due out in September.

Third on Amazon’s best selling list was another picture book linked to politics and projecting hope: ‘Ambitious Girl’ by Vice-President Kamala Harris’ niece, Meena Harris.

(Reporting by Umberto Bacchi @UmbertoBacchi, Editing by Lyndsay Griffiths. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)

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Why brands harnessing the power of digital are winning in this evolving business landscape

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Why brands harnessing the power of digital are winning in this evolving business landscape 2

By Justin Pike, Founder and Chairman, MYPINPAD

Delivery of intuitive, secure, personalised, and frictionless user experiences has long been table stakes in digital commerce, well before the era of COVID-19. As businesses harness the revolutionary power of digital technologies, they have pursued large-scale change to adapt to evolving consumer preferences (some more successfully than others, but that’s a blog for another day). Digital transformation is a term we hear repeatedly, and it looks different for each organisation, but essentially, it’s about utilising technology and data to digitise, automate, innovate and improve processes and the customer experience across the entire business.

As I said, this was already well underway but then came 2020 and no industry escaped the disruption of the coronavirus outbreak, which has had an indelible impact on businesses performance, operations, and revenue. Regardless of whether the impact of COVID has been very positive or very challenging, it has forced organisations globally to re-evaluate and re-orient strategies to adapt.

As lockdowns and pandemic-related restrictions continue to change daily life, this raises the question of how we can balance a dramatic shift to digital and the benefits it brings, while ensuring business continuity and innovation both during and post-COVID, and protecting everyone against fraud?

Digital is an essential survival tool, and even more so in a COVID world

No one could have predicted the dramatic digital pivot that has taken place over this year. Indeed, within weeks of the COVID outbreak cash usage in the UK dropped by around 50%. Digital solutions including delivery applications, contactless payments, mobile commerce, online and mobile banking have become essential components of a touchless customer experience in the era of social distancing. It’s no longer just about an enhanced and superior customer experience, it’s also about health, safety and survival.

In store, businesses have benefited from contactless payments enabling faster throughput and reduced need for consumers to touch payment terminals (therefore requiring greater cleaning, which degrades the hardware much faster). Mastercard reported a 40% increase in contactless payments – including tap-to-pay and mobile pay – during the first quarter of the year as the global pandemic worsened. Digital has also become an essential sales channel for many B2C brands. Where brick and mortar stores have been required to close, digital commerce enables continuity of customer relationships and revenue. This channel also provides brands with rich customer data, which can be used to enhance and personalise the customer experience and typically results in greater levels of engagement and uplifts in revenue.

Industry forecasts estimate that worldwide spending on the technologies and services enabling digital transformation will reach GBP 1.8 trillion in 2023 – a clear indication that the process represents a long-term investment and a global commitment to digital-first strategy. The key point here is that digital brings significant benefits, and regardless of COVID, is here to stay.

The challenges that rapid digital transformation brings to businesses

Justin Pike

Justin Pike

Regardless of whether businesses are operating in developed or less-developed economies, these times of crisis have levelled the playing field in the sense that all businesses are facing similar issues. Access to products and supplies, maintaining customer relationships, accelerating sales for some and declining sales for others, health and hygiene are just a few of the unique challenges brought about by COVID.

Many businesses in physical environments have had to swiftly implement changes to significantly reduce safety risks for staff and customers, such as contactless payments, mobile ordering and delivery options. But with these changes come a host of other benefits of digitisation, such as faster transactions, and reduced human error at the point-of-sale.

The reliance on technology, however, can also expose organisations and consumers to certain vulnerabilities. In particular, the risks of fraud and cybercrime have dramatically increased since the onset of the pandemic as scammers have taken advantage of digital technologies to target both businesses and individuals.

As a McKinsey report illustrates, new levels of sophistication in the activities of fraudsters have placed more pressure on companies that have been previously slow to go digital, bringing “into sharp relief how vulnerable companies really are”, and damaging the financial health of small and large businesses. In fact, the Bottomline 2020 Business Payments Barometer reveals that only one in 10 small businesses across the UK report recovering more than 50% of losses due to fraud.

But take these stats with a grain of salt. While it is important to be aware of the risks and challenges this new business landscape brings, it’s equally as important to have a lens firmly across your own business, industry and audience, and to identify the changes you can make internally to mitigate risk as well as improve your customer experience. Where can you make some quick wins? Do you have the right skillsets internally to achieve what you need to achieve? What technology is out there that will enable your business goals? There are tech companies like MYPINPAD that are making huge strides in software development, which will transform businesses globally.

A digital world post-COVID

Almost a year in, the line between business success and failure remains fragile. However, an ongoing transition towards greater digitisation will be the difference between survival and the alternative.

There is a wide range of initiatives businesses can implement to weather this storm. If we look at the space MYPINPAD operates within, secure digital consumer authentication is crucial to the ongoing success and security of not only financial products but also identification and verification across a range of different industry verticals. Shifting the authentication of consumers securely onto mobile devices enables businesses to completely reshape their customer experiences. By bringing together a more seamless, frictionless customer experience, accessibility, privacy, security and access to consumer data, businesses are able to drive digital transformation across day-to-day activities.

Against this backdrop, software with stronger security standards continue to play an ever more vital role in supporting society, protecting consumers and businesses from the increase in risks that rapid digitisation brings. Already, merchants can deploy PIN on Mobile technology from companies like MYPINPAD, onto their smart devices to speed up the digitisation process many are now tackling.

Essentially, opening up universal payments and authentication methods that feel familiar, for both online and face-to-face transactions, will be key to opening up a world of possibilities when it comes to redefining how businesses engage with consumers.

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Brexit responsible for food supply problems in Northern Ireland, Ireland says

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Brexit responsible for food supply problems in Northern Ireland, Ireland says 3

LONDON (Reuters) – Food supply problems in Northern Ireland are due to Brexit because there are now a certain amount of checks on goods going between Britain and Northern Ireland, Irish Foreign Minister Simon Coveney said.

British ministers have sought to play down the disruption of Brexit in recent days.

“The supermarket shelves were full before Christmas and there are some issues now in terms of supply chains and so that’s clearly a Brexit issue,” Coveney told ITV.

The Northern Irish protocol means there are “a certain amount of checks on goods coming from GB into Northern Ireland and that involves some disruption,” he said.

(Reporting by Guy Faulconbridge; Editing by Tom Hogue)

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