APR 13 2024

Last Data Update

APR 12 2024

Persons regulated under this Law

Article (10)

The regulation shall set out the following:

  • Processes and procedures for establishing, licensing and registration of the persons regulated by this law.
  • The activities of regulated persons, which require licensing or registration with CMA.
  • The rules prepared by regulated persons and the documents and registers that must be maintained and the period of maintaining.
  • The activities the regulated persons are prohibited to practice.
  • The activities or entities which do not require licensing or registration with the CMA.
  • The information and registers that can be exchanged between the regulated persons or any other person.
  • Fees for the services and products rendered by the capital market institutions and entities operating in the field of securities.
Article (11)

A regulated entities, in exercising their functions must comply with the following;

  • The code of conduct prepared by the CMA.
  • Place the interests of the consumers at the top of their priorities and dealings.
  • Provide the information and statements related to securities that are to be listed on the stock exchange or other services and products, to the CMA, before making any offer to the consumers or the public or accepting any request for providing of such services or products, as set out in the Regulation.
  • Strictly avoid the inclusion of any unfair or unnecessary term in contracts with consumers which prejudices their rights and interests, otherwise such conditions shall be deemed as void.
  • Maintain the confidentiality of the information related to the consumers and not allow any access to the same with the express consent of the consumer.
  • Ensure, while dealing with poorly solvent and inexperienced consumers, in the business of securities market that, the products or services are suitable to the consumer’s personal circumstances including their risk appetite, objectives and needs and any conflicts of interest, are adequately disclosed to the consumer. In case the consumer wishes to avail of a securities product or service after considering the risks, they must clearly communicate to consumers and capture in writing, the consumer’s consent to take the risks.
  • Avoid any abusive or misleading conduct such as providing inaccurate or deceptive information regarding any relevant and material aspects of the product or the service or the securities service provider or the fees, expenses, risks, withdrawal processes and regulatory restrictions that may be applicable.
  • Provide the CMA and the competent entities with any information or statements they request.
  • Disclose adequate information to the consumer in writing in clear, simple and transparent language, with comparisons of other similar products and allow sufficient time to understand the information, before accepting a transactional decision from the consumer.
  • Inform the consumer directly of any change in the material information provided to any consumer at the time of accepting a transactional decision if the effect of such transaction is still subsisting at the point of change; and inform the consumer on the options that lie before him including the process for terminating the transaction.

Marketing and execution of sell and buy orders of securities listed on a local stock exchange shall be exempt from the terms and conditions of comparison with other similar products stipulated in Clause (i) of this Article

Article (12)

Any interested person may request CMA to access the documents, records and minutes related to the regulated entities and obtain official statements or copies as per the applicable rules and procedures, for consideration of fees specified in the Regulation. CMA may decline the request if dissemination of the required statement or copy may be detrimental to the regulated entities or prejudices the public interest or the interests of investors. Such decisions shall be communicated with the underlying reasons.

Article (13)

A regulated entities must ensure that;

  • Transactions with related parties are entered into on fair and arms-length basis and not to favor them through the terms of such transactions.
  • Assets belonging to its consumers are duly accounted and kept segregated, in licensed banks or licensed capital market institutions, in a manner such that they are not affected even if the regulated entity has to face insolvency or any other adverse circumstance.
  • The capital resources required for it to absorb unexpected losses, as prescribed by the CMA, are maintained at all times.
Article (14)

The following shall be deemed as capital market institutions:

  • Stock exchange: An entity licensed to create or provide a real market or electronic system bringing together, buyers and sellers of securities.
  • Small and Medium Enterprises Exchange: an entity licensed to create or provide a real market or electronic system bringing together, buyers and sellers of shares and securities of small and mediums enterprises.
  • A Clearing Institution: an entity licensed to carry out the transmitting, matching and confirmation of payment of obligations or transfer of securities between the transacting parties or their agents prior to the settlement process.
  • Central counter party: an entity that is licensed to interpose itself between counterparties to contracts or transactions in one or more stock exchanges.
  • Depository Institution.
  • Settlement Institution.
Article (15)

All capital market institutions must formulate, after the approval of the Board, their own by-laws applicable to practicing their licensed activities under this Law.

Article (16)

The board may issue, explaining the reasons, directions of urgent remedial nature,to any capital market institution, including for time-bound modifications to its ownership, governance, management and operational arrangements etc., if it appears to it that such an institution has failed or is likely to fail in complying with any obligation or requirements imposed on it by or under this Law or the regulations and decisions issued thereunder.

Article (17)

A depository institution is responsible for:

  • registering and transferring the ownership of securities held in the name of the beneficial transferee, on receipt of information as per the forms and validations process prescribed by it for this purpose.
  • maintain electronic register of beneficial owners of the securities and the rights attached thereto.
  • exchange information and records with issuers or securities firms or any other person approved by the CMA, as set out in the Regulation.
Article (18)

Beneficial owner may create a pledge or hypothecation in respect of a security with or without its returns, only after informing the Depository in according to the prescribed rules and forms by the Depository.

Article (19)

A settlement institutions is responsible for;

  • Lend securities subject to explicit consent of the owners of such securities and in compliance with its own bylaws and the rules set out in the Regulation.
  • control over lined assets or collateral deposited with it by a consumer in connection with any transaction through such institution. The lien over such asset or collateral will subsist until all transactions initiated or carried out by the relevant consumer are completed.
  • Use assets or collateral to settle any claims arising out of any transaction carried out by the relevant consumer.
Article (20)

Capital market institutions shall not have the right to stop or withdraw from the settlement of any transaction executed under its by-laws or the provisions of this law or the regulation or decisions made thereunder.

Article (21)

The entities carrying out any of the following activities shall be deemed entities operating in the field of securities:

  • Intermediation (Brokerage)
  • Market making
  • Custodianship
  • Asset management
  • Margin financing
  • Investment banking Any other activities set out in the Regulation
Article (22)

The stock exchange shall regulate the activities of the entities carrying out intermediation (Brokerage), market making and margin financing in the stock exchange as set out in the Regulation.

Article (23)

The entities operating in the field of securities shall establish an association to ensure adherence to the standards of professional conduct and internationally recognized standards while carrying out their activities, and the decision to establish the association shall be issued by the CMA and the decision must specify the provisions related to establishment, the contribution of each member and the penalties which may be imposed on members. Membership of the association shall be a condition for obtaining a license from the CMA.

Article (24)

None of the capital market institutions and the entities operating in the filed of securities shall suspend their businesses, or effect a change in control over it, or merge with or to be aquired , or increase or reduce its capital, or get dissolved or liquidate its business, without prior approval of CMA and the competent entities, as the case may be, and in accordance with the procedures set out in the Regulation.

Article (25)

Capital market institutions and securities firms shall obtain the CMA’s prior approval for appointment of their directors, Chief Executive Officers and other senior employees, as specified in the Regulation.

Article (26)

While appointing their employees, capital market institutions and securities firms shall comply with the requirements, terms and conditions prescribed in the Regulation, and the CMA shall publish the names of the employees of such institutions and the persons who deal directly with the public, their qualifications, experience and any other particulars in the manner, as it deems appropriate.