Saudi Arabia’s blockchain settlement infrastructure for capital markets centers on two interconnected systems: Edaa’s distributed ledger integration for securities depository functions and Tadawul’s R3 Corda-based settlement layer for digital securities trading. Together, these systems enable T+0 atomic settlement that eliminates the counterparty risk inherent in conventional T+2 settlement, reduces reconciliation costs by an estimated 40-60%, and creates the post-trade foundation for Saudi Arabia’s tokenized securities market. Pilot volumes reached SAR 4.2 billion in 2025 across tokenized sukuk and fund instruments.
Settlement Architecture
Atomic Settlement (Delivery-versus-Payment)
The blockchain settlement infrastructure implements true atomic DvP:
Mechanism: The transfer of securities (tokens) and the transfer of payment (SAR stablecoin or digital riyal) occur as a single, indivisible transaction on the DLT. Either both legs settle simultaneously, or neither settles. There is no window during which one party has delivered securities but not received payment (or vice versa).
Technical Implementation: R3 Corda’s notary service guarantees transaction uniqueness and finality. Each settlement transaction:
- Buyer’s payment tokens are locked in a smart contract escrow
- Seller’s security tokens are locked in the same escrow
- The notary validates both legs are present and the transaction is valid
- Both legs settle simultaneously (tokens exchange ownership in a single atomic operation)
- Settlement finality is recorded on both parties’ ledgers
Settlement Finality: Settlement is final and irrevocable once confirmed by the Corda notary. There is no settlement netting or batch processing — each transaction settles individually in real-time.
Settlement Currency
Three settlement currencies are supported:
- Licensed SAR Stablecoins: SAMA-authorized stablecoins from approved issuers, providing 24/7 settlement capability
- Central Bank Reserves: For wholesale settlement between bank-affiliated participants, settled through SAMA’s SARIE system via a bridge to the DLT
- Digital Riyal (forthcoming): SAMA’s CBDC will serve as the primary settlement currency upon launch, providing risk-free digital settlement media
Post-Trade Cost Reduction
The blockchain settlement infrastructure targets significant cost reductions across the post-trade value chain:
| Post-Trade Function | Current Cost | DLT-Based Cost | Reduction |
|---|---|---|---|
| Clearing and netting | 2-4 bps per transaction | Eliminated (atomic settlement) | 100% |
| Settlement operations | 1-2 bps per transaction | <0.5 bps (automated) | 60-75% |
| Reconciliation | 3-5 bps per transaction | Eliminated (shared ledger) | 100% |
| Custody and safekeeping | 5-10 bps annually | 2-4 bps annually | 50-60% |
| Corporate action processing | Manual, variable cost | Automated (smart contract) | 70-80% |
| Regulatory reporting | 1-2 bps per transaction | Automated (embedded) | 80-90% |
These cost reductions are partially offset by the infrastructure investment required for DLT deployment, estimated at SAR 200-500 million across all market participants during the 2024-2028 implementation period.
Edaa’s Role in DLT Settlement
Edaa, as the Saudi central securities depository, plays a critical role in the blockchain settlement infrastructure:
Registrar Function: Edaa maintains the authoritative register of tokenized securities ownership. While the blockchain provides a real-time view of token holdings, Edaa’s register remains the legal record of ownership under Saudi corporate law.
Reconciliation Hub: Edaa operates reconciliation services between the DLT-based settlement system and the conventional CSD systems, ensuring consistency during the transitional period when both tokenized and conventional versions of the same security may coexist.
Custodian of Last Resort: As specified in the CMA custody standards, Edaa serves as the fallback custodian if a licensed digital asset custodian fails, ensuring continuity of settlement services.
Corporate Action Processing: Edaa processes corporate actions (dividends, coupons, rights issues, splits) for tokenized securities, triggering smart contract execution for automated distribution.
Network Participants
The settlement infrastructure connects:
- Tadawul: Trade matching and market data
- Edaa: Central securities depository and registrar
- 12 broker-dealers: Order routing and client settlement
- 4 SAR stablecoin issuers: Settlement currency provision
- 11 licensed custodians: Client asset safekeeping
- SAMA: Monetary policy and settlement finality oversight
- CMA: Market surveillance and regulatory reporting
Interoperability and Cross-Border Settlement
The infrastructure is designed for future cross-border interoperability:
GCC Interoperability: Technical feasibility studies are underway for DLT-based settlement interoperability with UAE and Bahrain capital market infrastructure, targeting cross-border tokenized securities trading by 2028.
mBridge Integration: The settlement infrastructure’s design anticipates integration with BIS Project mBridge for multi-currency cross-border settlement using CBDCs. Saudi Arabia joined mBridge in June 2024 alongside central banks from China, Hong Kong, Thailand, and the UAE, and the platform has already processed $22 million in trial cross-border transactions using its EVM-compatible mBridge Ledger blockchain. The project reached Minimum Viable Product (MVP) stage, with SAMA exploring programmable finance capabilities including automated escrow and compliance triggers.
ISO 20022 Compliance: All settlement messaging conforms to ISO 20022 financial messaging standards, ensuring compatibility with global financial infrastructure including SWIFT, CLS, and international CSDs.
Performance Metrics
Settlement infrastructure performance data (pilot period, 2025):
- Total settlement volume: SAR 4.2 billion
- Average settlement time: 3.7 seconds (trade to settlement finality)
- Settlement failure rate: 0.02% (compared to ~0.5% for conventional T+2 settlement)
- System availability: 99.98%
- Peak throughput: 340 transactions per second
- Average daily settlements: 2,800 transactions
Regulatory Framework
The settlement infrastructure operates under:
- CMA Digital Securities Settlement Rules — Published January 2025, establishing requirements for DLT-based settlement of tokenized securities
- SAMA Payment System Oversight Standards — Covering the payment leg of settlement transactions
- CMA Securities Tokenization Standards — Technical standards for the securities leg
- Edaa Operating Rules — Updated to cover DLT-based depository operations
The regulatory framework designates the blockchain settlement system as a “systemically important payment system” under SAMA oversight, subjecting it to enhanced supervisory requirements including annual stress testing and business continuity validation.
Technical Architecture Deep Dive
R3 Corda Enterprise Deployment
The selection of R3 Corda Enterprise as the settlement protocol followed a rigorous 12-month evaluation by Tadawul and the Saudi Blockchain Lab that tested seven blockchain platforms against 47 technical criteria. Corda’s point-to-point transaction architecture — where only parties to a transaction see its details, rather than broadcasting to the entire network — was the decisive factor for a regulated securities settlement environment.
The Corda deployment consists of:
- 12 validator nodes operated by approved network participants (Tadawul, Edaa, 4 banks, 3 broker-dealers, SAMA, CMA, and 1 backup node at the Saudi Blockchain Lab)
- Notary cluster of 3 geographically distributed notary nodes providing Byzantine fault-tolerant transaction validation across data centers in Riyadh, Jeddah, and Dammam
- Network Map Service operated by Tadawul, managing participant identity and node discovery
- Doorman Service controlling network membership and certificate issuance, ensuring only CMA-licensed entities can participate
The network processes settlement transactions through CorDapps (Corda Distributed Applications) that implement the DvP logic, corporate action processing, and regulatory reporting functions. Each CorDapp undergoes security audit by a CMA-approved auditor before deployment, and upgrades follow a governance process requiring consensus from Tadawul, Edaa, and CMA approval.
Data Residency and Sovereignty
All settlement infrastructure components are physically located within Saudi Arabia, complying with the CMA’s data residency requirements and Saudi Arabia’s Cloud Computing Regulatory Framework. No transaction data, private keys, or participant information leaves the Kingdom’s borders. This design contrasts with several international DLT settlement projects that use cloud infrastructure distributed across multiple jurisdictions.
The infrastructure operates across three Tier IV data centers:
- Primary: King Abdulaziz Financial District (KAFD), Riyadh
- Secondary: Jeddah Financial District
- Disaster Recovery: Eastern Province Technology Park, Dammam
Data replication between sites occurs with sub-second latency, and the disaster recovery site can assume primary operations within 15 minutes, meeting SAMA’s business continuity requirements for systemically important payment systems.
Transition Management
Migration from Conventional Settlement
The transition from conventional T+2 settlement to DLT-based T+0 settlement is managed through a carefully phased approach that minimizes disruption to existing market operations:
Dual-Track Settlement (Current): During the pilot and early production phases, digital securities settle through the DLT infrastructure while conventional securities continue using the existing Edaa CSD system. Both systems operate independently, with reconciliation processes ensuring consistency for any securities that exist in both tokenized and conventional forms.
Parallel Processing: When a security is available in both tokenized and conventional form (as planned under the convergence roadmap), Edaa operates a bridge that synchronizes token holdings on the DLT with book-entry positions in the conventional CSD. Conversion between forms (tokenize or de-tokenize) is processed within the same trading day.
Staff Training: Tadawul has invested SAR 15 million in DLT operations training for settlement staff, broker-dealer operations teams, and CMA surveillance analysts. A dedicated DLT Operations Center staffed by 35 specialists monitors the settlement infrastructure 24/7.
Capacity Planning
The current R3 Corda deployment supports 340 transactions per second peak throughput, sufficient for the pilot phase. Capacity planning for full production operation anticipates:
- 2027 target: 2,000 TPS to support 15-20 listed digital securities and anticipated retail investor participation
- 2028 target: 10,000 TPS to support full convergence with conventional securities settlement
- 2030 target: 50,000 TPS for a fully tokenized Saudi capital market
Throughput scaling will be achieved through horizontal node scaling, Corda 5 migration (which introduces flow framework optimizations), and potential sidechain architecture for high-frequency trading settlement.
Cross-Border Settlement Integration
The blockchain settlement infrastructure is designed to serve as Saudi Arabia’s gateway for cross-border tokenized securities settlement:
Project Aber Legacy: Saudi Arabia and the UAE conducted Project Aber in 2019-2020, a joint CBDC experiment between SAMA and the UAE Central Bank that demonstrated cross-border DLT-based payment settlement. The blockchain settlement infrastructure builds on Project Aber’s technical findings, particularly regarding cross-chain atomic swaps and multi-currency settlement. This experience directly informed Saudi Arabia’s decision to join mBridge in June 2024, where the Kingdom is now among five participating central banks building a production-grade multi-CBDC wholesale settlement system.
GCC Settlement Interoperability: The GCC cooperation framework includes a technical working group developing settlement interoperability standards between Saudi Arabia’s R3 Corda infrastructure and the UAE’s DLT settlement systems. The target is cross-border atomic settlement of tokenized securities between Tadawul and Abu Dhabi Securities Exchange (ADX) by 2028, enabling an investor to buy a tokenized security listed on ADX and settle in SAR through the Saudi infrastructure.
mBridge Integration: The settlement infrastructure anticipates integration with the BIS Project mBridge multi-CBDC platform, which would enable settlement in any participating central bank’s digital currency. Saudi Arabia joined mBridge in June 2024 alongside Hong Kong, Thailand, China, and the UAE — with the platform having already processed $22 million in trial transactions at MVP stage. Integration would enable a Hong Kong institutional investor to purchase Saudi tokenized sukuk and settle in digital Hong Kong dollars, with atomic cross-currency conversion at the settlement layer. The BIS stepped back from the project in October 2024, leaving management to the participating central banks — a governance shift that gives SAMA greater influence over the platform’s development direction.
SWIFT Integration: For participants who require compatibility with conventional financial messaging, the settlement infrastructure supports ISO 20022 messaging through a SWIFT gateway. Settlement instructions can originate from SWIFT messages and trigger DLT settlement transactions, enabling gradual migration from conventional to DLT-based settlement processes without requiring immediate full conversion.
Smart Contract Governance
Settlement smart contracts (CorDapps) are subject to strict governance requirements:
Development Standards: All settlement CorDapps must be developed in Kotlin or Java, using Corda’s official SDK. The CMA’s technical standards specify code quality requirements including minimum 90% unit test coverage, integration testing against the Corda test network, and formal security audit.
Upgrade Governance: Smart contract upgrades require a three-party approval process: Tadawul (as network operator), Edaa (as settlement agent), and CMA (as regulator). Emergency patches for critical security vulnerabilities follow an expedited 24-hour approval process with post-hoc regulatory review.
Versioning: All deployed CorDapps are version-controlled with immutable deployment records on the Corda network. Rollback procedures are documented and tested quarterly, ensuring that any problematic upgrade can be reversed within 30 minutes.
Future Technology Evolution
The settlement infrastructure roadmap includes several planned technology enhancements:
Corda 5 Migration: The upgrade from Corda 4 Enterprise to Corda 5 is planned for Q2 2027, introducing the new flow framework, improved database performance, and native Kubernetes deployment. The migration will be coordinated across all 12 validator nodes during a planned maintenance window, with rollback capability if issues arise during the upgrade.
Zero-Knowledge Proof Integration: SAMA and the Saudi Blockchain Lab are evaluating zero-knowledge proof technology for privacy-preserving regulatory reporting. This would enable the CMA to verify aggregate settlement statistics (total volume, participant compliance, concentration metrics) without accessing individual transaction details — enhancing privacy while maintaining regulatory oversight.
Quantum Resistance: The infrastructure’s cryptographic foundations are being evaluated for quantum computing resistance. While practical quantum computing threats are estimated at 10-15 years away, the long-lived nature of settlement infrastructure requires proactive preparation. The Saudi Blockchain Lab is testing post-quantum cryptographic algorithms for potential integration into the settlement layer by 2028.
The blockchain settlement infrastructure represents the technological foundation upon which Saudi Arabia’s entire tokenized securities market operates. Its performance, reliability, and security directly determine the viability of tokenized sukuk, equity tokens, bonds, and commodity tokens. The infrastructure’s designation as a systemically important payment system by SAMA reflects both its critical role and the regulatory commitment to ensuring its resilience meets sovereign-grade standards.
For settlement infrastructure inquiries: info@sauditokenisation.com