Capital Market Authority (Saudi Arabia)
هيئة السوق المالية
|Jurisdiction||The Kingdom of Saudi Arabia|
|Headquarters||Riyadh, Saudi Arabia|
|Agency executive||H.E. Mr. Mohammed A. Al Jadaan, Chairman|
The Capital Market Authority (CMA) (Arabic: هيئة السوق المالية) is the Saudi Arabian government organization responsible for regulating the Saudi Arabian capital markets. It has financial, legal and administrative independence and reports directly to the Prime Minister. Its responsibilities include setting rules and regulations, making sure they are followed, operating a committee to settle disputes and developing the capital markets in Saudi Arabia. Its role also includes regulating the Saudi Stock Exchange (Tadawul).
- 1 History
- 2 Responsibilities and functions
- 3 Capital Market Law
- 4 CMA Divisions
- 5 Implementing Regulations
- 6 General Securities Qualification CME-1
- 7 See also
- 8 References
- 9 External links
The Capital Market Authority was established by the Capital Market Law, issued by Royal Decree No. (M/30) dated 2/6/1424 H. (2 July 2003).
Responsibilities and functions
The CMA’s functions are to regulate and develop the Saudi Arabian Capital Market. It issues the required rules and regulations for the implementation of the provisions of Capital Market Law aimed at creating an appropriate investment environment. The basic objectives are to create an appropriate investment environment, boost confidence, and reinforce transparency and disclosure standards in all listed companies, and to protect the investors and dealers from illegal acts in the market.
The regulations of the Authority are as the following:
- Capital Market Authority
- The Stock Exchange (Tadawul)
- The Securities Depositary Center
- The Committee for the Resolution of Securities Disputes
- Appeal Panel
Duties and Authorities
The CMA is entrusted with the following duties:
- Regulate and develop the capital market and promote appropriate standards and techniques for all sections and entities involved in Securities Trade Operations.
- Protect investors and the public from unfair and unsound practices involving fraud, deceit, cheating, manipulation, and inside information trading.
- Maintain fairness, efficiency, and transparency in transactions of securities.
- Develop appropriate measures to reduce risks pertaining to transactions of securities.
- Develop, regulate, and monitor the issuance of securities and under-trading transactions.
- Regulate and monitor the activities of entities working under CMA.
- Regulate and monitor full disclosure of information related to securities and issuers.
The CMA is governed by a Board of five (5) full-time Commissioners appointed by the Royal Decree:
- H.E. Mr. Mohammed A. Al Jadaan (Chairman)
- Mr. Abdulrahman Al Rashed (Vice Chairman)
- Dr. Abdulrahman M. Al Barrak (Member)
- Dr. Adnan A. Soufi (Member)
- Dr. Najem A. AL Zaid (Member)
The Saudi Capital Market Law provides for the establishment of the “Saudi Stock Exchange” as a Joint Stock Company that operates as the only authorized entity to carry out the trading of securities in the Kingdom of Saudi Arabia.
The exchange operations are currently conducted through Saudi Stock Exchange (Tadawul), purporting to continuously develop a full-fledged security market that provides comprehensive and diverse financial services to compete internationally. Consistent with its mission to produce top quality and highly efficient securities exchange market products and services, the exchange constitutes to be an added advantage for all beneficiaries and participants in the market.
Securities Depository Center
The Capital Market Law provides for the establishment of the Securities Depository Center solely entrusted to execute the transactions of deposit, transfer, settlement, clearing and registering ownership of securities traded on the Exchange. The functions of the Securities Depository Center are currently operated by The Saudi Stock Exchange (Tadawul).
Capital Market Law
The Saudi Capital Market Authority was established to achieve a set of objectives, of which the most important are developing an organized, fair, transparent financial market, and ensuring the protection of investors from irregular practices, which involving deceit, cheat, fraudulence, or manipulation. To achieve these objectives and others, the market system has given the Authority financial, regulatory and supervisory frameworks to facilitate the completion of the tasks entrusted to the Authority. The Capital Market Law consists of ten chapters and sixty-seven articles.
The Division’s mission is to protect investors from unfair and unsound practices such as fraud, deceit, manipulation, insider trading, disclosure violations and carrying out securities business without license to achieve fairness, efficiency, and transparency in securities transactions.
The Market Supervision Division is responsible for monitoring the trade and primarily deals in securities, while also monitoring the electronic channels and websites to ensure that there are no unlawful acts or practices against Capital Market Law and its implementing regulations. The Division also responsible to ensure that Listed Companies, Board of Directors, Senior Executives and Substantial Shareholders comply with the continuous disclosure requirements and any instructions or directives issued by CMA. In addition to this, it also ensures the Listed Companies compliance with requirements of the Corporate Governance Regulations.
Corporate Finance & Issuance
The Corporate Finance & Issuance Division‘s primary responsibility is to ensure that investors are provided with all the necessary material information required to take well-informed investment decisions. This is achieved by ensuring that all involved parties are in compliance with the underlying rules and regulations related to the offering of securities.
The Division is also responsible for developing the capital markets by introducing innovative policy frameworks that facilitate the introduction of new securities, institutions and technologies, which are conducive to the growth of the Saudi capital markets.
Capital Market Institutions Supervision
The Capital Market Institutions Supervision Division is responsible for ensuring capital market institutions comply with the Capital Market Law and its Implementing Regulations to ensure a secure, fair, and orderly investment environment that enhances investor and public safeguards and promotes the proper regulation and development of the industry.
This is achieved via the implementation of a comprehensive Authorization and Supervisory framework aided by the execution of proactive & effective inspection, prudential, compliance, and anti-money laundering supervisory programs on capital market institutions.
Implementing Regulations are the rules, instructions, and procedures issued by the Authority for the implementation of the provisions of this Law.
The Authority works on the preparation of implementing rules after consulting experts from both Government Agencies and the Private Sector. The CMA’s board has issued the following Implementing Regulations:
- Anti-Money Laundering and Counter-Terrorist Financing Rules
- Merger and Acquisition Regulations
- Investment Funds Regulations
- Corporate Governance Regulations
- Real Estate Investment Funds Regulations
- Securities Business Regulations
- Authorized Persons Regulations
- Market Conduct Regulations
- Offers of Securities Regulations
- Listing Rules
- Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority
General Securities Qualification CME-1
In June 2010, CMA required the Chief Executive Officer, Managing Director and Registered persons to pass the CME-1 exam "General Securities Qualification". The exam is designed and managed by CMA but it takes place in AlKhaleej Training and Education.