Speaking at the MEED Middle East Capital Markets conference held in Dubai on 30 September-1 October, Al-Suhaimi said that the 68-article CML would establish ‘a strong government regulatory body – the Saudi Arabian capital markets authority – which has rule-making authority and enforcement powers necessary to ensure fair, efficient and vibrant securities markets for the kingdom’.

So far, SAMA has been the kingdom’s main capital market regulator. Under the new law, the CMA will regulate investments, securities and the still-to-be-established Saudi Arabian stock exchange, including the national securities depository, as well as register securities offered for subscription or sale to the public. In addition, the CMA will act to protect the integrity of the securities market against manipulation and insider trading, and review, approve and regulate mergers and acquisitions and other business activity. Among other responsibilities, the CMA will also work towards preventing fraudulent and unfair trade practices and provide investor education.

The CMA will be headed by a five-member board of Saudi nationals: Al-Suhaimi is widely tipped to become the chairman of the board. According to the legislation, the formation of the CMA is set to come into effect in late November, 90 days after the publication of the CML in the official gazette. Al-Suhaimi said that drawing up the CML’s by-laws was in its final stages, with the full set of regulations to be implemented within 180 days after their August publication.

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

Under the new law, 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 – be able to invest in Saudi Arabia. ‘The law does not inhibit international investors from participating, but it will be up to the CMA to decide who gets a licence,’ Al-Suhaimi said.