The Saudi Stock Exchange has selected HSBC Saudi Arabia to advise on its own planned flotation scheduled for 2018, the exchange, known as Tadawul, said in a statement.

"The appointment of a financial adviser is an important milestone in the beginning of the IPO (initial public offering) journey which is planned to take place by 2018 after obtaining the necessary approvals," the short statement said.

Tadawul Chief Executive Khalid al-Hussan told Reuters the exchange would make a decision "in the coming days" on who it would select as its advisor.

Three banking sources said the decision was made at a meeting of Tadawul's board on Thursday. The sources declined to be named as they were not authorised to speak to the media.

Tadawul is by far the largest stock market in the Middle East, with a market capitalisation of 1.51 trillion riyals (278 billion pounds), according to Thomson Reuters data.