Direct Trading in the Saudi Financial Market: A Comprehensive Guide

The term 'direct trading' refers to the ability to execute buy and sell transactions in securities (such as stocks, bonds, and sukuk) instantly without a human intermediary, through advanced electronic platforms licensed by the Saudi Capital Market Authority. Previously, trading was often done through brokers or traditional offices, where investors would send their orders to the broker, who would then execute them in the market, often leading to delays in execution and additional costs. Today, digital transformation has enabled investors to deal directly with the market through electronic platforms that provide real-time data and allow for rapid order execution.

The importance of direct trading in the Saudi market stems from several key factors. First, this system allows investors to monitor price movements and indicators in real-time, giving them a better ability to respond to market fluctuations and make investment decisions based on timely information. Second, direct trading contributes to increased transparency and efficiency within the financial market, as all buy and sell orders become visible directly in the order book, reducing opportunities for manipulation or delays in executing transactions. Third, direct trading supports market liquidity, as rapid order execution reduces bid-ask spreads, thereby enhancing the market's attractiveness to both local and foreign investors.

In the Saudi context, the Capital Market Authority has adopted a set of systems and regulations since the early part of this decade to ensure that electronic trading platforms comply with the highest standards of regulatory and technical security. These steps have contributed to attracting a wide segment of new investors, especially youth and individuals from technical backgrounds, to the stock market. With the launch of platforms like 'Mubasher Trading' and 'Tadawul,' investors can open trading accounts, monitor their portfolios, and execute their orders from anywhere at any time. Thus, direct trading represents a natural evolution of a modern financial market that keeps pace with global changes and responds to the aspirations of its investors.

Direct trading platforms in the Saudi financial market rely on advanced technical infrastructure that allows investors to input buy and sell orders directly into the central electronic market system. In these platforms, such as 'Mubasher Trading' and the official 'Tadawul' platform, the client's account is securely linked to the bank or brokerage firm, enabling instant transaction execution without the need for a broker's intervention. This process relies on user-friendly interfaces and interactive graphical indicators, where users can see the market depth (Order Book), execution prices, and other real-time indicators.

An investor's journey with direct trading platforms begins by opening a trading account with one of the licensed brokerage firms, electronically verifying their identity, and then depositing the required amount into the investment portfolio. After that, they receive a username and password to access the platform, which allows them to monitor prices, execute buy or sell orders, and place timed or conditional orders (such as limit or stop-loss orders), in addition to monitoring order execution in real-time.

These platforms also feature instant alert capabilities when prices move or orders are executed, helping investors make quick decisions. Most Saudi platforms support access via smartphone applications, making trading easier anytime and anywhere. Furthermore, direct trading platforms provide analytical reports and services for monitoring financial and economic news related to the market and listed companies, enhancing the investor's ability to assess opportunities and risks.

The increasing reliance on direct trading platforms has led to the development of robust cybersecurity systems, including two-factor authentication and full encryption of sensitive data, giving investors confidence in the protection of their funds and information. The Capital Market Authority and the Saudi Exchange Group also periodically monitor the performance of these platforms to ensure compliance with regulatory and supervisory standards and provide a safe and transparent trading environment.

Direct trading in the Saudi financial market offers several essential advantages that have made it the preferred choice for a wide range of individual and institutional investors. Among the most important of these advantages is the speed of order execution, as investors can input buy or sell orders in the blink of an eye, and they are executed immediately in the market based on real-time prices, without the need to wait or go through administrative stages. This speed gives investors the advantage of capitalizing on market opportunities as soon as they arise, especially during times of volatility or when significant news impacts stock prices.

On the other hand, direct trading provides high transparency in accessing the order book, allowing investors to see the bids and offers on stocks directly, helping them evaluate the level of liquidity and price spreads before making a buy or sell decision. This transparency enhances the investor's ability to make decisions based on clear information rather than broker estimates or conjectures.

Additionally, direct trading allows for real-time monitoring of the investor's portfolio, including realized and unrealized profits and losses, transaction history, and cash movements. This feature helps investors continuously evaluate their performance and adjust their investment strategies as needed. Furthermore, most direct trading platforms offer advanced technical and financial analysis tools, such as graphical indicators, trend drawing tools, and automated alerts, enabling investors to study the stock or sector more deeply.

It is also worth mentioning that direct trading reduces the overall cost of transactions, as brokerage commissions are lower compared to traditional trading, and some additional fees associated with employee intervention or phone calls are eliminated. Moreover, modern platforms allow for direct linking of bank accounts to facilitate deposit and withdrawal operations. Finally, direct trading encourages the development of investment culture, as investors become more aware of market dynamics and more capable of managing their portfolios independently.

Direct trading differs from traditional trading in several key points that affect the investor's experience and speed of interaction with the market. In the traditional system, investors often rely on a human broker to execute their orders, whether via phone, email, or branch visits, which can lead to potential delays due to verification procedures or order congestion, resulting in the loss of valuable investment opportunities, especially in highly volatile markets. In direct trading, investors execute their orders themselves through an electronic platform, providing them with complete control over the timing of execution and the price of the transaction.

In terms of transparency, direct trading allows investors to see market depth and order history in real-time, while traditional investors rely on broker reports or notifications of order execution after it occurs. This makes direct trading more suitable for investors who depend on real-time analysis and quick interaction with news or market movements. Conversely, traditional trading offers some personal support from the broker, who may provide advice or assist in executing complex orders, but this usually comes with higher fees and additional costs.

Regarding costs, direct trading typically features lower commissions due to reduced operational costs for the broker, and the element of human error in order entry or misunderstandings between the client and broker is eliminated. Additionally, direct trading platforms provide analytical tools and mobile applications that enable investors to monitor their portfolios and execute their orders anytime, while traditional trading may be limited by office hours or broker availability.

In terms of security and oversight, direct trading platforms are subject to strict technical oversight by the Capital Market Authority, and advanced security protocols are applied, while traditional trading may be exposed to risks related to information delays or errors in order transmission. Overall, direct trading represents a natural evolution in financial markets, meeting the needs of a new generation of investors seeking speed, transparency, and direct control over their financial decisions.

Direct trading platforms in the Saudi financial market are subject to a strict set of regulatory requirements imposed by the Capital Market Authority (CMA) to ensure investor protection and achieve integrity and transparency in transactions. First, all electronic trading platforms must be officially licensed by the authority and comply with high-security technical infrastructure, including full encryption and two-factor authentication to protect customer data and financial transactions. The authority also requires brokerage firms to provide effective communication channels with clients to address complaints and inquiries quickly and transparently.

Another essential aspect is that direct trading platforms must adhere to disclosure and transparency standards, where prices, indicators, and financial news must be displayed in real-time without delay. The authority mandates companies to provide periodic reports on platform performance, order execution volumes, and technical failure cases, committing to immediate disclosure of any material event that may affect investors' interests or market stability.

In this context, the authority issued a new regulatory framework in March 2025 concerning high-frequency trading (HFT), imposing strict controls on the use of algorithms and artificial intelligence in order execution, requiring companies to provide clear mechanisms for risk management and prevent market manipulation. The authority also included additional standards regarding platform security during peak market times, imposing periodic tests for the stability of technical systems.

Furthermore, the authority requires all brokerage firms and electronic platforms to provide clear instructions to users on how to trade, the associated risks, and the fees imposed on transactions. It emphasizes the necessity of verifying clients' identities and the source of their funds as part of Know Your Customer (KYC) procedures to mitigate the risks of money laundering or financing illegal activities. The authority monitors all operations periodically through advanced electronic monitoring systems that detect unusual patterns or suspicious activities.

All these requirements contribute to building a strong financial market that ensures the protection of investors' rights and supports market stability and integrity.

The cement sector is a pillar of the industrial economy in the Kingdom of Saudi Arabia, driven by increased demand for construction materials due to massive developmental projects such as Vision 2030 and infrastructure development initiatives. The Saudi market includes several leading competing cement companies, including Hail Cement Company, Saudi Cement, Yamama Cement, and Northern Cement, all striving to capture a larger share of the growing local market.

The sector features a dynamic competitive structure, where demand for cement is influenced by government spending rates on housing, transportation, and infrastructure projects, alongside supply factors such as production capacity of factories and prices of raw materials like fuel and electricity. In recent years, the market has experienced a production surplus of up to 15% of total capacity, due to the opening of new factories and expansion of production capabilities, creating challenges in maintaining profit margins and forcing some companies to offer competitive prices or seek external export markets.

Despite this, companies like Hail Cement have maintained relatively stable performance thanks to their operational strategies focused on cost reduction, efficiency improvement, and diversifying income sources through long-term contracts with major construction firms. Additionally, the adoption of advanced production technologies and the launch of environmentally friendly cement products respond to the requirements of new government projects that prioritize sustainability.

Changes in oil and gas prices directly affect the cost of cement production, placing companies that are more efficient in energy management in a better competitive position. With the state's shift towards sustainable projects and support for national industries, opportunities for sector companies are expected to continue, provided they can innovate and respond quickly to market changes. Overall, the Saudi cement sector reflects a dynamic balance between supply and demand, supported by supportive government policies and an evolving investment environment.

Hail Cement Company serves as a practical example of how investors can benefit from direct trading in the Saudi financial market, especially within a vital sector experiencing continuous changes like the cement sector. Established in the Hail region in northern Saudi Arabia, the company opened its modern factory in 2019, giving it a competitive advantage in terms of production technology and proximity to major construction projects in the area. With the evolution of direct trading platforms, investors can now monitor Hail Cement's stock performance in real-time and observe the impact of significant events on the stock price.

During the years 2024-2025, Hail Cement's stock price ranged between SAR 11.60 and SAR 12.00, with a market capitalization of approximately SAR 3.48 billion based on the outstanding shares of 300 million. The stock features a historical price-to-earnings (P/E) ratio ranging between 9 and 10 times, slightly below the sector average, making it attractive to investors seeking value stocks. The stock's appeal is also highlighted by regular dividend distributions, as the company declared a dividend of SAR 0.60 per share for the year 2023, representing a dividend yield of about 5.2%.

Direct trading allows investors to react quickly to the company's periodic disclosures, whether quarterly financial results or announcements of new contracts with government or private entities. When any significant financial or operational news is released, the immediate movement on the stock appears on electronic platforms, giving investors the opportunity to adjust their orders instantly. For example, when the company announced the expansion of its contracts in new housing projects in mid-2024, demand for the stock surged, and direct trading platforms showed a spike in buy orders.

Investors following through direct trading also face similar challenges, such as fluctuations resulting from sector announcements or changes in energy prices. However, the transparency and speed of trading help manage these challenges, enabling investors to make informed decisions based on real-time data, with the ability to benefit from the financial and technical analyses available on the platforms. Thus, Hail Cement represents a living model of the benefits of direct trading in a dynamic industrial sector.

Hail Cement Company, along with the Saudi cement sector in general, has witnessed notable financial developments during the years 2024-2025. The price of Hail Cement's stock in mid-June 2024 was approximately SAR 11.60, later rising in some periods to over SAR 12.00, before declining with market fluctuations. Considering the number of outstanding shares (300 million), the company's market capitalization is around SAR 3.48 billion, placing it among the mid-sized companies in the sector.

In terms of profits, financial data for 2023 showed net profits of approximately SAR 380 million, allowing the company to achieve a P/E ratio ranging between 9 and 10 times, lower than some of its competitors in the sector such as Saudi Cement and Yamama Cement, reflecting the company's relative profitability strength. Conversely, annual dividend distributions ranged at SAR 0.60 per share, representing a yield of about 5.2% based on a price of SAR 11.60, which is an attractive rate for investors seeking stable income.

At the sector level, performance indicators for competing companies such as Saudi Cement (symbol 3010) and Northern Cement (3009) showed similar results in terms of annual growth rates, with some major companies recording slight increases in profits due to long-term government contracts and sustainability initiatives. It is noted that the sector as a whole benefited from housing and infrastructure projects launched in 2024, which reflected in increased demand for cement and raised operational levels.

These figures demonstrate the importance of monitoring financial indicators through direct trading platforms, as they help investors assess company performance and compare stocks based on criteria such as P/E ratio, earnings per share, and dividend yield. They also highlight the importance of continuously reviewing financial disclosures and sector news, as they have a direct impact on stock movements and market liquidity.

Direct trading platforms in the Saudi financial market have witnessed rapid technological and regulatory developments in recent years, aiming to enhance the efficiency and speed of order execution and improve the investor experience. In 2024, the Saudi financial market administration launched partnerships with technology companies to update the trading center's infrastructure, upgrading the infrastructure to support thousands of transactions per second while reducing response times to fractions of a second. Additionally, artificial intelligence technologies have been integrated into the platforms, allowing investors to access faster market analyses and forecasts based on advanced algorithms.

On the regulatory side, the Capital Market Authority issued a new regulation in March 2025 to regulate high-frequency trading (HFT), imposing strict standards on the use of smart algorithms to ensure that information is not exploited or manipulated in order execution. These controls included risk monitoring requirements and obligating brokerage firms to provide detailed reports on the performance of technical systems and emergency failures, along with periodic tests for platform stability.

Recently, improvements have also been made in user security, such as implementing two-factor authentication, encrypting sensitive data, and providing permanent backups for data, which has reduced the risks of cyberattacks or data loss. Furthermore, user interfaces have been developed to become more user-friendly and clear, allowing for order execution via smartphone applications quickly and without complication.

These technological and regulatory developments have had a direct impact on increasing investor confidence in direct trading platforms and have contributed to attracting new segments of investors, especially youth and technical groups. They have also enhanced the efficiency of the Saudi financial market, making it more capable of accommodating significant increases in trading volume during periods of high activity or important economic events.

The spread of direct trading in the Saudi financial market has led to a noticeable improvement in liquidity and transparency levels, both of which are essential elements for attracting local and international investors. Through direct trading platforms, orders are executed quickly and without delay, reducing the time gap between supply and demand and contributing to narrowing the price spreads between buy and sell orders. This, in turn, leads to an increase in the number of transactions executed daily and enhances the ability of investors to enter or exit the market at any moment without significantly affecting the price.

In terms of transparency, direct trading platforms provide the ability to access the order book and real-time trading volumes, enabling investors to accurately assess the level of demand and supply for stocks or bonds. These platforms also allow for the immediate monitoring of all financial disclosures and material news, reducing information asymmetry and giving all investors equal opportunities to access information that affects prices.

This positive impact on liquidity and transparency has been clearly reflected in the performance of companies in the industrial sector, such as Hail Cement, where data showed an increase in trading volumes after each financial disclosure or announcement of new contracts, indicating the market's rapid response to new information. Transparency has also contributed to enhancing investor confidence in market performance and reducing hesitation in making investment decisions.

On another note, direct trading has reduced opportunities for manipulation or fraud, as all orders are recorded electronically and subjected to immediate oversight by the Capital Market Authority, ensuring the integrity of transactions and enhancing the reputation of the Saudi market regionally and internationally. Overall, direct trading represents a fundamental pillar in building an advanced financial market characterized by high liquidity and transparency.

Despite the numerous advantages offered by direct trading, there are several risks and challenges that investors must consider when using these platforms in the Saudi financial market. One of the most prominent risks lies in the speed of execution itself; while this speed allows for the exploitation of opportunities, it may lead investors to make hasty and unconsidered decisions, especially during market fluctuations or when significant news drives prices to move sharply.

Other risks relate to sudden price volatility, where investors may incur losses if they cannot activate stop-loss orders or continuously monitor their portfolios through the platform. Additionally, there is the risk of over-reliance on real-time analysis or getting swept up by rumors circulating in the electronic market, which may lead investors to make emotional decisions instead of decisions based on accurate financial analysis.

On the other hand, direct trading platforms face technical challenges related to system stability, especially during peak periods or when unexpected technical failures occur that may prevent timely order execution. Although brokerage firms and the Capital Market Authority impose periodic tests to ensure system stability, the possibility of malfunctions or slow responses remains. Cybersecurity attacks also pose an additional risk, despite the implementation of advanced protection measures such as two-factor authentication and data encryption.

Capital management and leverage risks are other challenges, as some investors may drift towards excessive speculation without accurately assessing the level of risk relative to available capital. To mitigate these risks, it is advisable to continuously review the guidelines of the Capital Market Authority, use stop-loss orders, and allocate only a portion of capital for direct trading, while also consulting a licensed financial advisor to establish a balanced investment plan that aligns with the investor's goals and risk tolerance.

Direct trading has clearly impacted the movement of the Saudi stock market by increasing daily trading volume and improving the market's response to news and material disclosures. For example, when Hail Cement Company announced positive financial results or secured new government contracts, an immediate increase in buy orders for the stock was observed through direct trading platforms, leading to rapid price movements that reflect strong immediate demand. This type of instantaneous interaction was previously delayed due to traditional trading procedures; today, it can be monitored in real-time through the order book.

Market data also showed that periods of listed companies disclosing their financial results witness a noticeable increase in direct trading activity, as investors seek to adjust their positions based on new information. This rapid interaction enhances market efficiency and reduces opportunities for manipulation or exploitation of asymmetric information, as the same information is made available to all investors simultaneously.

In cases of sharp fluctuations or economic crises, direct trading played a dual role; on one hand, it facilitated investors' quick exit from their positions to minimize losses, while on the other hand, it led to increased price volatility with the rush of instantaneous orders. This highlights the importance of risk management and the use of protective tools such as limit and stop-loss orders.

The experience of Hail Cement is no exception; the stock recorded clear increases in trading volume following each significant announcement, reflecting the effectiveness of direct trading in enabling investors to respond immediately to events. Overall, the Saudi stock markets have become more dynamic and efficient due to the expanded use of direct trading platforms, with the need to enhance investment culture to keep pace with rapid changes.

To maximize the benefits of direct trading and avoid its risks in the Saudi financial market, investors should follow a set of practical guidelines. First, it is important to choose an electronic trading platform licensed by the Capital Market Authority and ensure that it provides all analytical tools and instant alerts that assist in making informed decisions in a timely manner. It is also essential to review the fees and commissions imposed by the brokerage firm and compare them with other platforms to choose the most cost-effective option with the best services.

It is recommended to establish a clear investment plan that includes defining investment goals, timeframes, and acceptable risk levels. Risk management tools available on the platforms, such as stop-loss and limit orders, should be utilized to minimize potential losses if the market moves against expectations. Additionally, diversifying the investment portfolio and not relying on a single stock or sector is advised to distribute risks and maintain stable returns.

Continuously monitoring news and financial disclosures is crucial, using reliable sources such as the Tadawul website or official economic news sites. It is important to avoid trading based on rumors or unverified news circulating on social media and instead rely on financial and technical analysis of the targeted stock or sector.

Finally, it is wise to allocate only a portion of capital for direct trading and not invest all savings in short-term trades. Consulting a licensed financial advisor when needed, especially for new investors or those with limited experience in financial markets, is advisable. These guidelines help achieve a safer and more effective trading experience amid the dynamics of the Saudi market.