CMA opens applications for alternative trading system

Logo of The Capital Market Authority (CMA) 

The Capital Market Authority (CMA) started accepting applications on Oct. 9 for a license to operate an alternative trading system (ATS) for sukuk and debt instruments.

The last date of application is March 31, 2024.

The licensing of ATS for sukuk and debt instruments in the Kingdom will contribute, in the current phase, to improving the secondary market for debt instruments, and providing a base of investors and products in the Saudi financial market, the CMA said in a statement.

This will have a positive impact on supporting debt instruments in the Kingdom, expanding the base of investors, providing a wider range of products available in the Saudi financial markets, and enabling effective technical solutions to facilitate linking and trading.

The CMA invited interested parties from the Kingdom and abroad to apply for a license to practice market activities in the category of ATS. Applicants must be joint stock companies, and their applications must be specific to ATS and comply with the requirements for obtaining a license to practice market activities as set forth in the Securities Exchanges and Depository Centers Regulations. Applications must be submitted using the dedicated application form.

According to the licensing requirements, the applicant must submit a list of the types of securities to be traded and the categories of investors to be enabled to trade them. The CMA may impose any conditions or restrictions on the proposed license application, as it deems necessary, to ensure the safety of the market and the protection of investors.

The ATS is a market licensed by the CMA to enable specific categories of investors to operate in the trading of specific types of securities, the CMA explained, noting that it is targeting the granting of a license to only one company during the current application period.

This is in line with the structure of the financial market, and with the aim of enhancing the confidence of investors and the stability of markets, licensed depositories and clearing centers. The type of securities targeted in this licensing period is sukuk and debt instruments, while the CMA may accept license applications for other securities later.

The CMA has developed the regulatory framework for licensing, supervision, and oversight of markets. It aims to effectively perform its duties and responsibilities, enhance the regulatory environment and stability in the Saudi financial market, and develop procedures to achieve effective supervision and oversight of markets in light of the amendments to the Capital Market Law.

In June 2022, the authority adopted the Securities Exchanges and Depository Centers Regulations as part of its efforts to develop the Saudi financial market and its infrastructure, support its growth and prosperity, and meet the needs of its participants.

The CMA’s Market Infrastructure Institutions Supervision Department will receive inquiries from interested parties until Nov. 30, 2023, the statement added.