Algorithmic Trading On Tadawul: Permitted Or Not?

As algorithmic trading becomes the norm in many capital markets around the globe, it is still a relatively new concept on the Tadawul, which capital market institutions continue to observe with intrigue. Although there has been no formal guidance on algorithmic trading from the Capital Market Authority (CMA) or Tadawul, in recent years, there have been a number of developments that indicate a shift towards an optimal environment where high-frequency trading methods (such as algorithmic trading) could potentially thrive.

Shift Towards an Optimal Environment for HighFrequency Trading

2018: Short Selling Regulations

Short selling is an important component of high-frequency traders' activities. The Short Selling Regulations in 2018 allowed short selling on Tadawul for the first time in 2018. This can be viewed as a pioneering step towards facilitating activities such as algorithmic trading, although the regulations do not refer to high-frequency trading of any type.