The long awaited appointment of the CMA's board and its chairman Al-Suhaimi, who was tipped by many to get the job, has been widely praised. 'I could not have thought of a more appropriate person for this job,' says Beshr Bakheet, managing partner at Riyadh-based Bakheet Financial Advisors. 'A lot of discipline will be needed in the early stages to give the commission the required credibility. And [Al-Suhaimi] has done that in the banking sector for years and years.'

The board's appointment - originally scheduled for November 2003 - was announced on 2 July following the issuance of a royal decree naming the body's five members. In addition to Al-Suhaimi, the board will include one deputy chairman, Ibrahim al-Rumaih, and three members - Mohammed al-Shammarani, Abdullah al-Abdulgader and Abdulrahman al-Khalaf.

The board's first initiative is expected to be the approval of the CML's by-laws, which are understood to be close to completion, before the end of the year. The CML itself was approved by the Supreme Economic Council in June 2003, ratified by the cabinet and published in the official gazette last August (MEED 20:6:03).

So far, SAMA has been the kingdom's main capital markets regulator. Under the new law, the CMA will regulate investments, securities and the still-to-be-established stock exchange, including the national securities depository. It will register securities offered for subscription or sale to the public and protect the integrity of the securities market against manipulation and insider trading, and review, approve and regulate mergers and acquisitions and other business activity.

The CMA will be complemented by the establishment of the stock exchange, which will be a private joint stock company and take over the existing Tadawul system. The exchange's board will consist of nine members, three from the government, four representing brokers and two representing listed companies. The exchange will have powers to draw up listing rules, set capital requirements and disclosure requirements for brokers, and settle disputes.

Analysts say the establishment of a well regulated capital market will be a major stimulus to the local economy and ensure an increase in the number of companies presently listed on the Tadawul, which stands at 71. Moreover, the financing of major projects will become easier with the introduction of new instruments oncethe law is implemented and an effective secondary market is in place.

Foreign investors, who to date have only been permitted to invest in local stocks through open-end mutual funds offered by local banks, will - in principle - also be able to invest in the local stock market under the CML. However, while the law does not inhibit international investors from participating, the CMA will be the final decision maker when it comes to issuing licences.