According to a recent report on the Parallel Market (Nomu), although Saudi Arabia is the first country in the Gulf region to launch a parallel market, such markets have existed since the 1970's in many mature economies. Perhaps the best examples are the US NASDAQ and the UK's FTSE AIM. The report issued by Jadwa Investment states that "replicating the success of some of the more established parallel markets will not be easy. The example of the Neuer Markt in Germany illustrates how the perception of weak regulatory oversight combined with inherently riskier and volatile nature of parallel markets can be detrimental." The report noted that despite this, "the Capital Markets Authority (CMA) has published very detailed and concise provisions related to Nomu. Although these regulations are looser than TASI requirements, they are stricter than international equivalents, and underline the CMA's approach in giving priority to sound regulation ahead of hurried implementation." According to the report, "although Nomu is open to all types of companies, we do expect the number of SME listings to rise in-line with the government initiatives to drive up SMEs contribution to the Kingdom's GDP. The Musharakah program is one example of an initiative that aims to boost the growth of SMEs, especially at the start-up level." The Musharakah and Nomu highlight the strategic direction behind government policy in trying to develop a path for SMEs for listing. The report added that "looking at both the Musharakah and Nomu together, we can see the strategic direction behind government policy in trying to develop a path for SMEs that allows them to progress from a small-scale start-up to a listed entity." — SG
