New regulations established by CMA for securities trading
The Saudi Capital Market Authority (CMA) recently revealed new regulations regarding joint-stock companies purchasing stocks in other joint-stock companies.
According to the new rules, listed joint stock companies on the Saudi stock market index are prohibited from engaging directly in financial securities trading. Such companies are also prohibited from trading securities unless stated in the codes and regulations of those firms.
The authority is also requiring all firms who wish to trade securities to engage in the market either through investment funds or through private portfolios managed by licensed traders.
Furthermore, the trader must trade according to an agreement subject to CMA approval, reported Arab News.
All joint-stock companies that are interested in financial securities investments must do so according to a decision issued by the company's board of directors.
The agreement must outline guidelines to regulate investments and identify operational risks involved.
Additionally, securities trading must not conflict or harm in any manner the interests of the operations of the engaging joint-stock company in the securities trading.
If a company finds its activities in conflict with the new regulations at the time that the CMA decision was made, it has three months to rectify the problem.