Tadawul CSD: Overview of New Services

25th Apr, 2012

Agenda

Tadawul at a Glance

Market Stats

CSD Overview

Issuers’ Obstacles

Overview of New Services

Next Steps

Tadawul Roles

Services Value Chain

We enable Saudi companies to raise the capital they needto grow, by listing securities on our highly-efficient, transparent, and well-regulated market.

Through our market we give companies access to adeep and liquid pool of investment capital. Once companies have been admitted to trading, we use our services and expertise to help them maximise the value of their listing

We enable Saudi companies to raise the capital they needto grow, by listing securities on our highly-efficient, transparent, and well-regulated market.

Through our market we give companies access to adeep and liquid pool of investment capital. Once companies have been admitted to trading, we use our services and expertise to help them maximise the value of their listing

We invest in technology to provide the trading platform used by investors, via broking firms, to buy and sell securities.

Our systems provide fast and efficient access to trading allowing investors, brokers and institutions to quickly access the equity market. Trading is tightly integrated to the Tadawul depository, with all sell orders being checked for availability of the security prior to order release into the market

We supply high-quality, real-time prices, market indices, news and other information to the financial community. Strong relationships with data vendors help ensure the markets receive the information they depend upon.

We invest in technology to create new applications for ourdata and seek to constantly upgrade our products andservices.

We supply high-quality, real-time prices, market indices, news and other information to the financial community. Strong relationships with data vendors help ensure the markets receive the information they depend upon.

We invest in technology to create new applications for ourdata and seek to constantly upgrade our products andservices.

We provide the securities settlement system for both debt and equity instruments, as well as custody services. Our computerized book-entry-settlement system enables instant settlement and delivery of securities at T+0 for equities.

Our CSD provides an important range of registration and depository services to investors and listed companies, enabling companies to manage their service requirements towards their investor base

We provide the securities settlement system for both debt and equity instruments, as well as custody services. Our computerized book-entry-settlement system enables instant settlement and delivery of securities at T+0 for equities.

Our CSD provides an important range of registration and depository services to investors and listed companies, enabling companies to manage their service requirements towards their investor base

1. Listing 2. Trading Services

3. Market Information 4. Settlement, Registry and Depository

Company Admission

to Exchange

List

Company Admission

to Exchange

List

IPO Share-holder

registration

IPO Share-holder

registration

Order entry

Order entry

Trade

Execution

Trade

Execution AllocationAllocationTrade info process &

dissem.

Trade info process &

dissem.

Listed Company news &

disclosure

Listed Company news &

disclosure

Clearing and

netting

Clearing and

nettingSettlementSettlement PaymentPayment Accounting

& reporting

Accounting & reporting Custody Custody

Shareholder database

services (registry)

Shareholder database

services (registry)

CompanyMaintain& Renew in

Exchange List

CompanyMaintain& Renew in

Exchange List

Company Admission

to Exchange

List

Company Admission

to Exchange

List

IPO Share-holder

registration

IPO Share-holder

registration

Order entry

Order entry

Trade Execution

Trade

Execution AllocationAllocationTrade info process & dissem.

Trade info process &

dissem.

Listed Company news & disclosur

e

Listed Companynews &

disclosure

Clearing and

netting

Clearing and

nettingSettlementSettlement PaymentPayment Accounting

& reporting

Accounting & reporting Custody Custody

Shareholder database services (registry)

Shareholder database

services (registry)

CompanyMaintain& Renew in Exchange

List

CompanyMaintain& Renew in

Exchange List

Trading & Settlement Cycle

Page 5

Client places order with broker

Broker OMS transfers order to

Tadawul

Tadawul Depository checks order for

availability of client holding

Order entered into Tadawul trading

system

Shares deducted real-time from

Sellers Depository account

Tadawul system prints trade ticket

batch EOD

Bank receives cash end-of-day via SAMA RTGS netting system

Broker may optionally instantly credit selling client cash account,

prior to receiving cash from clearing bank at EOD

Client places order with broker

Broker checks client balance (credit limit)

Broker OMS transfers order to

Tadawul

Order entered into Tadawul trading

system

Shares transferred real-time to

Buyers Depository account

Tadawul system prints trade ticket

batch EOD

Bank pays cash end-of-day via SAMA

market-wide netting process (RTGS)

Broker deduct cash from its client cash account balance (prior to sending to Clearing bank for EOD cash netting)

Order rejected by Tadawul if client holding at Depository not

adequateOrder

Executes at

Tadawul

SELLER

BUYER

Cash settlement occurs end of

day, before start of next Tadawul

trading day

Broker requires Clearing Bank with account at SAMA (SARIE) to make

and receive cash settlements arising from trading at Tadawul. Tadawul

calculates net EOD position of broker and instructs SAMA to

automatically credit/debit Clearing Bank’s account at SAMA

Feature: Tadawul checks each broker buy order real-time before order book entry, for potential breach of broker’s intra-day settlement position limit as set by clearing bank. Broker’s position recalculated real-time (position = limit + executed trades – buy orders). Over limit buy orders are rejected prior to order book entry

EOD: Clearing Bank Cash NettingT+0: instant delivery and

cash payment for investors

Agenda

Tadawul at a Glance

Market Stats

CSD Overview

Issuers’ Obstacles

Overview of New Services

Next Steps

Market Stats

• GDP of 2,100 B SAR (560B USD)• Equity market free float is about 40%• Private placements:

• 12 private bonds (OTC traded)• 8 private JSCs (OTC traded)

• 15 sectors (major sectors are Petrochemical, Banking, Cement, Retail, Telecom)

• Market PE of 13-14x• 2011 Corporate earnings of over 90B SAR• About 50B SAR dividends distributed in 2011

Security No of Listings Market Cap(SAR) Settlement Cycle

Equity 153 1,480 B T+0Bonds 8 38 B T+2ETF 3 85 M T+0

Capital RaisingNUMBER OF NEW COMPANIES LISTING (IPO)

IN 2008, NEW IPOS AT TADAWUL RAISED $9.7 BN, MAKING TADAWUL THE SECOND LARGEST IPO MARKET IN THE WORLD IN 2008 AFTER NYSE (AHEAD OF LSE AND NASDAQ)

* Excludes secondary capital raising and rights issues

CAPITAL RAISED* (IPO) US$ BN

2003

2004

2005

2006

2007

2008

2009

2010

1

2

4

9

26

13

11

10

2003

2004

2005

2006

2007

2008

2009

2010

1.4

0.3

1.5

2.9

4.8

9.7

1.2

1.1

Market GrowthNumber of Transactions

(millions)

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 110

20

40

60

80

100

120

Mill

ions

CMA established to regulate the market

Tadawul set up to run the Saudi Equity market

Tadawul set up to run the Saudi Equity market

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 -

1,000

2,000

3,000

4,000

5,000

6,000 Value of Equities Traded (SR Bn)

Valu

e of

Equ

ities

Tra

ded

(SR

Bn)

= US$ 1,403bnApproximately the same

size as Italy

= US$ 1,403bnApproximately the same

size as Italy

50% drop to US $683bn

50% drop to US $683bn

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 -

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Number of Shares Traded (Million)

Num

ber o

f Sha

res T

rade

d (M

illio

n)

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 -

500.00

1,000.00

1,500.00

2,000.00

2,500.00

3,000.00

Value of Market Capitalisation (SR Bn)

Valu

e of

Equ

ities

List

ed (S

R bi

llion

s) = US $657bn= US $657bn

TASI Index & Market PE

2004 2005 2006 2007 2008 2009 2010 2011 Current

8,206.2

16,712.6

7,933.3

11,176.0

4,803.06,121.8 6,620.8 6,417.7

7,568.0

TASI - Price Level

2004 2005 2006 2007 2008 2009 2010 2011 Current

22.9

17.115.8

14.6 15.1

19.9

16.213.9

14

PE Ratio

Agenda

Tadawul at a Glance

Market Stats

CSD Overview

Issuers’ Obstacles

Overview of New Services

Next Steps

Key Functions

Master Data Maintenance.

System and Portfolio Maintenance.

Member and Issuer Maintenance.

Corporate Action

Initial Public Offering (IPO).

Capital Increase / Decrease.

Acquisition or Merge.

Clearing and Settlement

(T+0) Settlement for Equity and ETFs.

(T+2) Settlement for Bonds.

Maintain brokers settlement cap.

Sharebook Reporting.

Securities Transactions

Ownership Transfer.

Pledges.

Ownership Restrictions.

Ownership Limit.

Lock / Unlock over Securities.

Dematerialization of Certificates.

General Assembly and e-voting.

Members Training.

Inquiries

Investor Services (Reception).

Accounts & Portfolios

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

52,498 78,811 425,927

1,384,287

2,574,326

3,575,460

3,666,528

3,948,843

3,997,556

4,046,152

4,100,000

Inve

stor

s

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 -

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

2,788 51,232 435,771

1,652,312

3,478,928

5,335,735

5,884,101

6,685,114 6,930,516

7,137,397

7,400,000

Portf

olio

s

Agenda

Tadawul at a Glance

Market Stats

CSD Overview

Issuers’ Obstacles

Overview of New Services

Next Steps

Issuer Obstacles

Difficulty in communicating with shareholders

Lack of an easy mechanism for shareholders to know about their dividend entitlements

Accumulation of unclaimed amounts

Difficulty in participating in AGMs

Shareholders unaware of certain certificates (materialized shares)

Filling the gap between issuers and their shareholders

Empowering investors by enabling them to participate more effectively

Elevating the practices of shareholder relations at listed companies

Tadawulaty

Development Timeline

10/20091st eVoting used

In acquisition txn

03/2011Launching 1st phase of

Tadawulaty

10/2011 – 03/2011eVoting applied for a

number of AGMs

10/2011Launching 2nd phase

of Tadawulaty

2012 – 2011Promotion and

awareness of services to listed companies

2013 – 2012Developing more

services and promotion of existing ones

Existing Services

Electronic Voting Trading Restriction Tawasul Service

AGM ManagementDividend Entitlement & Payment Status

Registry Services

Sharebook Access

“Being-Developed” Services

Call Center Search Engine for unclaimed amounts

Customized ReportsWireless Voting

Agenda

Tadawul at a Glance

Market Stats

CSD Overview

Issuers’ Obstacles

Overview of New Services

Next Steps

Registration & Identity Check

Electronic Registration - Online

LoginVisit

User ID

Password

Broker website

RedirectUser ID

PasswordConfirm

TadawulatyInvestor

In person

Visit

Investor

• Validate Identity• Apply for investor

Broker website

Enter OTP sent to mobile no

Tadawulaty

Send

Email

AGM Services

First Phase (Setup):

• Issuers to send the following: Company Logo. Attachments (i.e. financial statements, CV’s or anything that helps

the investor in making a good decision). Agenda items. Owners completely excluded from the AGM or excluded at item

level. E-Voting duration (e.g. 1 to 2 weeks).

• Tadawul setup and approval of AGM:AGM preparation:

1. Enter basic information.2. Enter detailed information.3. Enter agenda data.4. Add agenda items (e.g. a simple item, cumulative voting, normal

voting).5. Identify AGM members (e.g. AGM Secretary, Ministry of

Commerce representative... etc.)6. Data entry of AGM Minutes of Meeting.

Second Phase (E-Voting):

• Starting Electronic Voting.

• Notification to shareholders of the company via SMS and e-mail.

• Voting on behalf: brokers will call shareholders to vote on behalf of them.

• Shareholders have the option to change their votes.

• E-Voting will end before 11:00 a.m. on AGM day and Sharebook will be updated automatically.

Third Phase (AGM Day):

• The Company will have an updated Sharebook in the same day of AGM meeting.

• Distributing of printed voting cards to all attendees (i.e. shareholders and voters on behalf).

• Shareholders still have the option to change their votes.

• Tadawulaty can provide the company with the following reports:1. Attendance report. 2. Attendance report including vote types.3. Missing voting cards report.4. Total voting result report.

• All AGMs will be archived including reports, issuer can review them at anytime.

5. Voting progress report.6. Attendance holding summary report.7. Minutes of meeting report. 8. Voting summary report.

Facilities

eVoting & AGM stats

18 AGMs managed in 2011, 16 reached quorum from 1st meeting

Over 11 AGMs so far in 2012 – 30 AGMs requested so far

eVoting for 10 different AGMs were live – same time

Higher percentage from outside the AGM city

In 2011, the average of eVoting was about 15-20%. Higher percentage in 2012 (35% so far)

Unlisted companies are also using this service

Some changes are coordinated with brokers to increase this further

Dividends Services

Historical Dividend

Dividends services

Newly Announced

Periodical update of

payment status

Payment Status

Entitled Dividend

Expected Dividend

Dividends Search Service

Periodical update of

payment status

Payment Status

Entitled Dividend

unclaimed amounts

distribution

Dividends Services Process (Entitled, Announced)

Investor will see and get the following (Expected Dividend)

Investor will see and get the following (Entitled Dividend)

Investor will get Notification (SMS & Email) for Expected dividendInvestor will see Expected Dividend (daily) per portfolio and Total

Investor will get Notification (SMS & Email) for Entitled DividendInvestor will see the Actual Entitlements per portfolio and Total

Issuer

The issuer will announce new Dividend to be approved by the next AGM

The announcement will be publish in Tadawul website

Tadawul admin will approved the announcement for Tadawulaty investor

Share Book Change daily

Share Book and Entitlements fixed

When the AGM approved the dividend the status will change in tadawulaty to Entitled

The share Book will be ready in Tadawulty system and the issuer can download the share book for (Certificate and Portfolio holder )

and send it to the distribution bank

The Bank will distribute the dividend and will send the payment status to Tadawul to

uploaded in the Tadawulaty system

Tadawulaty will update the payment status periodically as agreed with the SABIC For

each dividend and each company

Investor will see the payment status for each dividend with updated date

Investor will SMS and e-mail notification for any unclaimed amount

Dividends Stats

Historical entitled dividends are available in Tadawulaty from 2001 to 2012

34 companies have provided dividends payment status from 2001 to 2012

Total amount of unclaimed dividends for those companies is more than SAR 666 million which belongs to 155,506 investors

Total amount of entitled dividends available in Tadawulaty is more than SAR 278 billion which belongs to 2.1 million investors

Total amount of dividends payment status available in Tadawulaty is about SAR 77 billion which belongs to more than 1 million investors

Consolidated Reporting

Member 1 Member 2 Member 3 Member 4

Stocks

Sukuk

BondsCertificates

ETFs

Tadawulaty

Unlisted Companies

Listed Companies

Unlisted Companies

Tadawul provides a list of registry services to listed companies

Tadawul will provide the same list of services to unlisted companies

Corporate actions reporting

Shares Ownership registry service

Shares registry service

Sharebook reporting

Dividends Reporting service

AGM & e-Voting service

Sharebook Reporting

Login to Enter the request

Review the request

Check the file and review the company

details

The admin approved or reject the request

Tadawul admin

1 2

Request will send3

The admin will enter the reason of rejection

If Request is ApprovedSharebook will be send to the company

Company

Chose requested date and file type

If Request is Rejected

Tadawul will Pledge all issuer stock and will send Trading Restriction notification for all Top Executives, Board of Directors and their associates

Trading Restriction

Shareholder Communication Service (Tawasul)

The Tadawulaty system will run the

massages in the chosen date

SMS Gateway

Issuer

Tadawul admin will review the request and approved after the review

Issuer will prepare the massages

SMS and e-mail notification will be send by the system

The investor will receive the massage from the company

Dividend Entitlement & Payment Status

AGM invitation

IPO Deposit

Important News

………………………

Tadawul will send report with number of notification that send to investors

The issuer will enter Tadawulaty system and enter the required massages and define the

sending way (SMS, e-mail)

Roadshow announcements

Agenda

Tadawul at a Glance

Market Stats

CSD Overview

Issuers’ Obstacles

Overview of New Services

Next Steps

Shareholders Services Evolution

Basic Registry Services

Fragmented Shareholder

Services

Integrated Shareholder

Relations Services

Full Fledged Investor Relations Services

• Keep the shareholders data

• Generate sharebook report on request

• Consolidated Portfolio Reporting

• AGM & e-voting• Dividends Reporting• Sharebook reporting• Certificates Search• Tawasul• Trading Restriction

• Shareholder relations services

• Wireless voting• Call center

• Shareholder relations services

• Webcasting• Investors Targeting• Competitive

Intelligence

Envisaged Shareholder Relations Package