Edaa: Everything You Need to Know About the Saudi Depository Center

The Securities Depository Center (Edaa) is the only authorized reference entity in the Kingdom of Saudi Arabia for the custody and registration of securities ownership such as stocks, bonds, sukuk, and debt instruments. Edaa was established as an operational arm of the Tadawul Group and operates under the supervision of the Capital Market Authority. Its primary mission is to ensure the accuracy and reliability of ownership records and oversee the electronic transfer and updating of financial assets. Through this central system, the security of investor data is guaranteed, settlement processes are expedited, and the market can operate more efficiently with digital developments. Edaa is not an investment entity or a financial intermediary; rather, it is the provider of the essential infrastructure that ensures the integrity of operations in the Saudi financial market.

The Depository Center is overseen by the Capital Market Authority and is part of the Tadawul Group, but it is not a publicly traded company. Edaa enjoys high operational independence with a strict commitment to the regulations and supervisory instructions in the Saudi market. Its systems and procedures are designed to ensure the protection of investor rights and compliance with disclosure and settlement requirements that meet international standards. The Capital Market Authority periodically reviews and updates the regulations governing Edaa's operations, which is directly linked to initiatives for developing the Saudi financial market under Vision 2030. Thanks to this stringent framework, Edaa contributes to enhancing investor confidence, whether they are individuals or institutions, local or foreign.

The Securities Depository Center offers a comprehensive package of services to investors, including the electronic custody and registration of stocks and bonds, settlement and transfer of ownership after transactions are executed, disbursement of cash and in-kind distributions (such as dividends or coupons), and issuance or updating of digital ownership certificates. Edaa also allows for real-time monitoring of changes in investment portfolio ownership through brokers and banks, providing investors with complete transparency regarding their financial status. Additional services include facilitating capital increases, managing preemptive rights, and documenting mergers and acquisitions. All these services are designed to reduce operational and paperwork risks and facilitate the investor experience in the Saudi market.

The journey of any security in the Saudi market begins with recording the transaction in the Tadawul system, after which its details are sent directly to Edaa to document the new investor's ownership. Edaa updates the shareholder or bondholder register as soon as it confirms the execution of the transaction and the financial counterpart is settled. The settlement process in Saudi Arabia currently relies on a T+2 system or faster, thanks to Edaa's digital updates, meaning that the transfer of ownership and balance updates occur within two business days or less. When distributions are made, Edaa sends a notification to banks and brokers to automatically disburse amounts to investors. This integrative linkage between trading, settlement, and depository systems is what distinguishes the Saudi market and ensures the safety and transparency of operations.

Edaa plays a pivotal role in protecting investor rights by securely and centrally maintaining records, preventing ownership duplication or asset manipulation. In the event of any dispute or inquiry regarding the ownership of a share, Edaa's record is the final legal reference. The central system also allows for the extraction of official reports that clarify the investor's ownership at any time, enhancing transparency and reducing risks associated with the loss or forgery of traditional paper documents. Additionally, automating the processes of ownership transfer and settlement reduces human errors and speeds up the processing of requests, thereby enhancing the confidence of all parties in the market.

In recent years, Edaa has witnessed a significant technological transformation, launching a digital transformation project that includes developing a comprehensive electronic platform to manage all financial and administrative operations. International ISO 20022 standards have been implemented, facilitating data exchange with banks and government entities. Edaa has also adopted digital ownership certificates instead of paper documents and enabled portfolio monitoring through applications like 'Tadawulati'. Thanks to these updates, transaction settlements have become faster and more secure, with real-time notifications for investors regarding any changes to their portfolios or when distributions are made. The digital transformation at Edaa is a crucial step in enhancing the competitiveness of the Saudi market regionally and globally.

As the Kingdom expands its issuance of bonds and government sukuk, Edaa has become the central entity for managing and registering all these financial instruments. Edaa handles the settlement of debt instrument transactions, disburses coupons (sukuk returns), and documents investors' ownership through advanced electronic systems. This role has enhanced the confidence of local and international investors in Saudi debt instruments and contributed to increasing liquidity and expanding the government financing base. Edaa has also enabled government entities to execute mergers, maturities, and financial distributions to investors smoothly and periodically, supporting the growth of the local debt market within a stringent regulatory framework.

While the Tadawul market is the platform for executing transactions, Edaa represents the final and crucial link in recording and documenting these transactions. After any buying or selling operation is completed through Tadawul, the transaction details are sent to Edaa, which documents the ownership of the securities and updates the shareholder or bondholder register. This complementary relationship ensures that all trades are accompanied by an official and documented record, protecting investors from any disputes or administrative errors. The integration between Tadawul and Edaa also supports the acceleration of settlement processes, positively reflecting on market liquidity and efficiency.

Statistics for 2024-2025 indicate that Edaa has witnessed a notable growth in transaction volume, with settlement operations increasing by 20 to 25% compared to the previous year. The number of companies with registered shares in Edaa reached approximately 220 by the end of 2024, while the market value of deposited securities exceeded 4 trillion Saudi Riyals. Edaa also completed over 99.9% of its electronic transactions on time, reflecting the quality and efficiency of the system. This growth has resulted from an increase in new listings, rising liquidity, and the market's shift towards complete digitization.

One of Edaa's most important roles is to enhance transparency in the Saudi financial market. It allows investors and companies to track securities ownership instantly and accurately, and grants regulatory bodies the ability to monitor transactions and ensure the integrity of settlements and ownership transfers. Additionally, reliance on digital records reduces the chances of manipulation or loss of rights and enhances the credibility of the market in the eyes of local and foreign investors. This pivotal role has made the Saudi market one of the most developed in the region in terms of infrastructure and investor rights protection.

Edaa is considered a Saudi counterpart to global depository centers such as DTCC in the United States and Euroclear in Europe. Despite differences in regulatory environments, all these centers share the primary goal of securely maintaining and registering financial assets. Edaa's experience is distinguished by its alignment with local requirements, such as supporting Islamic sukuk and integration with Saudi banking systems. Furthermore, the digital transformation and adoption of international standards have positioned Edaa among global centers in terms of security and efficiency, with ongoing development to keep pace with the significant growth in the Saudi market.

There are no direct competitors to Edaa within the Saudi market, as regulatory frameworks have designated the central depository role to a single entity. The only competition may come from clearing and settlement companies or from the introduction of new technologies such as blockchain, which could offer alternative solutions in the future under regulatory supervision. At the international level, major depositories collaborate in exchanging experiences and technologies, but their operations remain geographically confined. Edaa's monopoly on these services ensures stability and reduces operational risks, but it requires continuous updates to meet the changing needs of the market.

In 2024 and 2025, Edaa launched several new projects, such as developing a unified digital platform for all services, implementing an instant settlement system (T+0), and expanding real-time notification services for investors through smartphone applications. It has also engaged in regional partnerships with depositories in the Gulf to share and exchange expertise and has begun implementing new international standards for settlement reporting. Future plans focus on enhancing cybersecurity, supporting transactions in government sukuk, and facilitating the participation of local and foreign investors through the digitization of the entire lifecycle of financial instruments.