CMA seeks feedback on foreign market trading rules

Logo of Capital Market Authority (CMA)

The Capital Market Authority (CMA) called upon all interested and relevant persons and participants in the capital market to share their feedback on the draft regulatory provisions related to conducting business in financial markets outside the Kingdom.

The consultation period will last for 30 days, ending on Oct. 27, it said in a statement.

The draft aims to enhance the regulatory framework governing capital market institutions when dealing with clients in financial markets outside the Kingdom.

Under the draft, suitability requirements will apply to transactions conducted in foreign financial markets that are equivalent to the Main Market or the Debt Instruments Market, in accordance with the requirements set out in the Capital Market Institutions Regulations.

Accordingly, institutions will be required to meet suitability requirements before commencing transactions with a client in such markets, without having to reassess suitability for each subsequent transaction, unless there is a material change in the information or circumstances relating to the client that warrants a reassessment.

For margin transactions involving securities in foreign markets, the draft aims to establish regulatory controls to mitigate associated risks. These include requiring clients to provide a margin of at least 50% of the transaction value and conducting periodic monitoring of the margin.

The draft also prohibits margin transactions involving highly leveraged instruments or companies whose accumulated losses exceed half of their capital.

The CMA said all feedback and comments received from the public will be carefully reviewed to finalize the regulatory provisions governing the conduct of business in financial markets outside the Kingdom.

The provisions are expected to take effect on Nov. 1.

Comments can be submitted through the unified electronic platform Istitlaa during the consultation period.