CMA approves market-making regulations, procedures

Logo of the Capital Market Authority (CMA)

The Capital Market Authority (CMA) announced today, Dec. 4, ratifying the “Regulations of Market Making and Market Making Procedures”, previously proposed by the Saudi Exchange (Tadawul), in a bid to regulate the activities of listed securities market making, according to a statement.

The decision targets addressing the impacts of approving the market-making registration application. This is besides setting a description of the mechanism of practicing such activities on securities.

In a statement, the market regulator said these regulations include the market makers’ activities through the offering of continuous orders to buy/sell securities during the market open session to provide liquidity to the relevant listed securities. Also, among the conditions of the market maker, they shall be a member of the capital or derivatives market and be aware of the written policies and procedures to separate between market making and any other activities practiced by the market maker.

Additionally, the latter should pass the security and technical requirements necessary to exercise such an activity, or any other condition proposed by the market and approved by the CMA.

The market maker’s liabilities include assigning an account with the Securities Depository Center Co. (Edaa), where applicable, and Securities Clearing Center Company (Muqassa) that are limited to practicing market-making activities of only on specific securities, in accordance with the Market-Making Agreement.

Also, all market-making activities practiced by the market maker shall be in compliance with the Capital Market Law, its Implementing Regulations and the Market Rules, and any other relevant laws.

The CMA's approval of the market-making regulations and procedures came as part of the market regulator’s continuous efforts to facilitate the trading process. This includes raising the efficiency and volume of liquidity in the capital market through the constant provision of listed securities buy/sell orders.

In a separate statement, Tadawul said the market-making regulations and procedures aim to regulate related trading activities on the equity and derivatives markets. This is to ensure the availability of liquidity and increase price formation efficiency in the Saudi capital market.

The glossary of defined terms used in the exchange rules, as well as the market-making regulations and procedures, shall be effective starting from its publication date.