The CMA warned in a notice that appeared in Saudi Arabia’s national newspaper that “conducting securities business without a licence shall be considered violating the relevant provisions of the capital market law and its implementing regulations and shall be subject to sanctions.”
A significant issue for financial services companies, such as funds or insurance providers, is the cost of getting a licence to operate in Saudi Arabia, as this requires an office to be set up and a minimum number of staff.
Sean Kelleher chief executive at Mondial (Dubai) said: “It’s ‘typical’ of Saudi regulation… quick into decision making, and when they draw line they mean it. So if there are distributors trying to sell without the appropriate licensing they must be poorly-informed.”
Some Gulf observers are also reporting that there is shock in parts of the UAE’s financial community at the tone of the notice and there are fears of overly draconian regimes coming into force at some point in the future.
Nigel Sillitoe, chief executive of market intelligence firm Insight Discovery said: “This is the first time I’ve seen a regulator produce a hostile notice like that. There are concerns that other regulators in the region might follow suit.” Sillitoe added that he is hosting a roundtable event of heavyweight industry professionals this Sunday where this issue will be discussed.
The CMA notice also spells out in its notices how investors can check the list of authorised people to on the CMA’s website at www.cma.org.sa and are urged to immediately report any incidence of securities business carried out by an individual or institution who are not authorized by the CMA to conduct such business.
The CMA’s functions are to regulate and develop the Saudi Arabian Capital Market by issuing required rules and regulations for implementing the provisions of Capital Market Law. The basic objectives are to create an appropriate investment environment, boost confidence, and reinforce transparency and disclosure standards in all listed companies, and moreover to protect the investors and dealers from illegal acts in the market, it states on its website.
The other key authority in the country, the Saudi Arabian Monetary Agency (SAMA), is the central bank which also supervises commercial banks and ‘promotes the growth and ensures the soundness of the financial system.”
