Connecting to Tadawul, EDAA & Muqassa

Saudi Arabia's capital market has become one of the most actively developed in the region, and connecting to it requires more than a single point of integration. The market operates through a set of specialized institutions, each responsible for a distinct stage of the trade lifecycle. For technology teams building order management, custody, or post-trade platforms, understanding how these entities fit together is the foundation for any successful connection.

The Saudi Market Structure

The Saudi market follows the modern separation of trading, depository, and clearing functions that characterizes most mature financial centers. Three core institutions sit at the heart of this structure, and each plays a clearly defined role:

• Tadawul (the Saudi Exchange): The operator of the equities, debt, and derivatives markets. It is where orders are matched and executions take place. Tadawul provides the trading venue, the order book, and the market data that participants consume to make decisions.
• EDAA (the Securities Depository Center): The central securities depository (CSD) for the market. EDAA maintains the registry of securities ownership, holds positions in book-entry form, and is responsible for settlement of transactions, the safekeeping of holdings, and the processing of corporate actions such as dividends, rights issues, and capital changes.
• Muqassa (the Securities Clearing Center): The central counterparty (CCP) for the market. Muqassa steps between buyers and sellers after a trade is executed, novating the transaction so that it becomes the counterparty to each side. This guarantees performance, manages counterparty risk, and calculates the net obligations that ultimately flow to settlement.

Above these operating entities sits the Capital Market Authority (CMA), the regulator that oversees market conduct, licensing, and disclosure. Any firm operating in the market must account for the CMA's reporting and compliance expectations alongside its technical connectivity to the three institutions.

How an Order Flows Through the Market

The life of a transaction in this structure moves cleanly through execution, clearing, and settlement, with a different institution owning each stage:

• Execution: An order is routed to Tadawul, where it is matched against the order book. Once the match occurs, an execution is generated and reported back to the participant.
• Clearing: The executed trade is passed to Muqassa as the central counterparty. Muqassa novates the trade, applies risk and margin processes, and nets obligations across a participant's activity so that only the resulting positions need to be settled.
• Settlement: The netted obligations are sent to EDAA, where the actual transfer of securities and the corresponding exchange of cash take place. Ownership records in the depository are updated to reflect the new holdings.

This separation means a single trade touches three systems before it is complete, and a participant's platform must be able to follow the transaction through each handoff rather than treating execution as the end of the process.

Connectivity, Settlement, and Messaging

The technical interfaces between participants and these institutions follow widely adopted financial industry standards, which keeps integration aligned with global practice:

• FIX connectivity: Order routing and execution flow to and from the exchange typically rely on the FIX protocol, the standard messaging language for electronic trading. This covers order entry, amendments, cancellations, and execution reports.
• T+2 DVP settlement: The market settles on a T+2 cycle, meaning settlement occurs two business days after the trade date. Settlement follows the delivery-versus-payment (DVP) principle, where the transfer of securities and the transfer of cash are linked so that one does not occur without the other, eliminating principal risk.
• ISO 15022 messaging: Depository and post-trade communication, including settlement instructions, confirmations, and entitlement notifications for corporate actions, commonly uses ISO 15022 message formats. Supporting these structured messages is essential for automated reconciliation between a firm's books and the depository's records.

What Technology Teams Must Handle

Operating in this market is as much an operational challenge as a connectivity one. Beyond establishing the trading session, a participant's technology stack has to support the full post-trade lifecycle:

• Depository integration: Systems must exchange settlement instructions with the depository, reconcile positions, and keep internal holdings synchronized with the official registry. Mismatches between internal records and depository balances need to be detected and resolved promptly.
• Corporate actions processing: Dividends, rights issues, bonus shares, splits, and similar events must be captured from depository notifications, applied accurately to client positions, and reflected in cash and entitlement calculations. This is one of the most error-prone areas of post-trade operations and benefits heavily from automation.
• Clearing and margin: Platforms must consume the net obligations and any margin or risk figures produced through the central counterparty, and represent them correctly for funding and settlement.
• Regulatory reporting to the CMA: Firms must produce the disclosures and transaction-level reporting the regulator requires, with the data quality and audit trails needed to satisfy oversight.

Handling these functions reliably requires a platform that treats execution, clearing, and settlement as a single connected workflow, with consistent reference data and reconciliation at every step. Manual handling across disconnected systems quickly becomes unsustainable as volumes grow.

How ZagTrader Connects to the Saudi Market

ZagTrader provides firms operating in the Saudi market with integrated connectivity across the full trade lifecycle, linking order execution on Tadawul, clearing through Muqassa, and settlement and custody through EDAA within a single platform. By supporting FIX order flow, T+2 DVP settlement, ISO 15022 post-trade messaging, automated corporate actions processing, and the reporting expected by the CMA, ZagTrader helps participants operate in the market with the automation, reconciliation, and oversight that a modern capital-market infrastructure demands.