CMA directs capital market institutions to comply with rules governing algorithmic trading

Logo of Capital Market Authority (CMA) 

The Capital Market Authority (CMA) today issued a circular to all capital market institutions requiring compliance with regulatory requirements governing algorithmic trading, with the aim of enhancing trading integrity and efficiency and limiting potential risks and adverse effects on the capital market.

The circular is based on a decision issued by CMA board, which introduced several regulatory provisions, most notably setting a maximum ratio of algorithmic trading orders to executed orders in securities listed on the Main Market, effective November 1, 2026.

Capital market institutions have been granted a transition period to adjust their operations, ending no later than December 31, 2026, alongside requirements to comply with supervisory controls governing algorithmic trading systems.

The regulator requires capital market institutions to ensure that the ratio of algorithmic trading orders to executed orders for a security listed on the Main Market during the open-market session (the second session) does not exceed 20 orders per trading day for each registered trader and each security separately. The limit applies according to the classification of securities by liquidity levels, including high, medium, low and very low liquidity categories.

The authority also stressed the need to comply with Article 54 of the Capital Market Institutions Regulations. This includes establishing and maintaining supervisory systems and procedures to ensure the integrity and efficiency of algorithmic trading and prevent adverse effects on the market.

Institutions must also establish specific methodologies for developing and testing algorithmic trading systems, algorithms and strategies before their implementation and use. They are required to put in place supervisory policies and systems to monitor algorithmic trading and effectively oversee submitted orders, issue relevant alerts and reports, and enable algorithmic trading systems or algorithms to be shut down when necessary.

In addition, institutions must retain records related to algorithmic trading and its systems, and provide the CMA and Saudi Exchange (Tadawul) with any related information or data upon request.

The circular follows the CMA’s publication, on September 24, 2026, of a consultation paper titled “Regulatory Provisions on Proposed Restrictions on Algorithmic Trading.” The proposal was published on the unified electronic platform for public and government consultations “Istitlaa” and on the CMA’s website for a period of 30 calendar days to solicit public feedback.