The Saudi stock market has become a "hot cake", attracting high-frequency trading companies from Wall Street.

Saudi Arabia is stepping up efforts to attract high-frequency trading firms in order to boost trading activity in the largest stock market in the Middle East. This move has already attracted major players such as Citadel Securities and Hudson River Trading. According to sources, Saudi Tadawul Group Holding Co. is collaborating with some of the fastest and most secretive high-frequency trading companies on Wall Street to incorporate their feedback into the modification of its derivatives market framework. Sources also indicate that the operator of the Saudi stock exchange is expanding its international roadshows, expanding its activities from the US and Europe to Asian markets such as Japan and India. Momentum is building. Some sources report that Citadel Securities and Hudson River Trading are seeking to expand their operations in Saudi Arabia, while market makers like Tower Research Capital are also testing their algorithms on the Saudi exchange. These companies have not disclosed the details of their activities on the Saudi exchange and do not appear on the official list of market makers. However, their involvement suggests that even the most latency-sensitive international participants are deepening their footprint in Saudi Arabia. Saudi Arabia has the largest stock market in the Middle East. Sources reveal that Saudi Arabia began engaging with algorithmic and quant-driven trading companies around the time of the $26 billion IPO of oil giant Saudi Aramco in 2019. This cooperation aligns with Saudi Arabia's "Vision 2030" agenda, which aims to expand its capital markets and increase foreign participation. Enhancing Infrastructure In 2023, Tadawul's technology division, Wamid, introduced hosting services that allow trading companies to host servers near the exchange's matching engine - a crucial infrastructure upgrade for high-frequency strategies. Tadawul has also hired financial technology provider Pico to assist with infrastructure deployment and connect the exchange to other markets. Tadawul CEO Mohammed Al-Rumaih stated that the exchange has established a dedicated department to manage relationships with international investors, which helps strengthen ties with quantitative investors, hedge funds, and high-frequency trading clients. He said, "Our exchange already has many clients from the US, Europe, and the UK, and we believe the largest growth opportunity currently comes from Asia." Tadawul is the largest stock exchange in the Gulf region, with an average daily stock trading volume of around $1.7 billion as of the end of April. According to exchange officials, high-frequency trading accounts for 25% of Tadawul's daily trading volume, significantly lower than the global exchange average. Nasdaq estimates that 50% of stock trading volume in the US is driven by high-frequency trading. By global standards, the Saudi market still lacks depth and trading volume, limiting the scalability of large electronic trading strategies. To address this, Tadawul has appointed companies like Morgan Stanley Saudi Arabia branch and Bank of America Saudi Arabia branch as registered market makers to enhance liquidity and price discovery. Introducing more high-frequency trading firms will be key to these efforts, as these firms can deploy proprietary trading books without the restrictions of banks. Tadawul is also implementing other initiatives, such as launching more exchange-traded funds (ETFs) tracking Saudi stocks and striving to list more companies. Pico founder and CEO Jarrod Yuster stated: "With improved infrastructure, we expect liquidity to increase significantly. Five years from now, the trading volume of this exchange might be completely different."