Saudi Arabia: CMA set to license brokerages
| Al-Suhaimi: brokers
Saudi Arabia's Capital Markets Authority has moved closer to full implementation of the 2003 capital markets law by announcing the imminent licensing of non-bank financial intermediaries. CMA governor Jammaz Al-Suhaimi said in late May that regulations on the establishment of brokerages would soon be issued; this will put an end to Saudi commercial banks' monopoly on share trading in the kingdom. However, foreigners look set to remain excluded from offering brokerage services. Nahed Taher, senior economist at National Commercial Bank (NCB), and an adviser to the CMA committee reviewing the brokerage regulations, says the rules should appear by mid-July. They will be accompanied by rules regarding applications for asset management and financial advisory licences. She expects that financial advisory companies will be required to have minimum capital of SR400,000 (just over $100,000) while brokerages will need minimum capital of SR2 billion (about $500 million).
The capital markets law was issued by royal decree in June 2003, and paved the way for the creation of the CMA as an independent regulator. However, Taher notes that the implementation of the law – via the issuing of regulations by the CMA – has been very gradual, aimed at steady development and building confidence in the market.