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The Saudi Market Authority approves the amended financial adequacy rules

The Board of the Saudi Capital Market Authority has approved the amended Financial Adequacy Rules, to be implemented as of April 1, 2023.

According to today’s Financial Authority statement, today, Thursday, the amendments came with the aim of enhancing the stability of financial market institutions, which enhances the confidence of participants in the financial market, and contributes to creating an attractive investment environment that supports the growth of the national economy.

The statement added that the amendment of the financial adequacy rules comes in light of the Authority’s keenness, since its inception, to regulate and continuously develop the entities subject to its supervision that carry out securities business, and to strengthen the control procedures and the level of financial adequacy for those entities, and raise the efficiency of managing the resources of those institutions to provide better services to their clients in line with the best global practices.

The main elements of the amendments are the updating of financial adequacy requirements for conducting securities business, including updating requirements related to credit risks, market risks, operational risks, and concentration risks.

The main elements of the amendments also include updating the methodology for calculating the minimum capital adequacy, facilitating the financial adequacy requirements for investment management activities, and arranging and providing advice in accordance with the nature of these activities, so that the financial adequacy requirements for these activities are based on expenditures.

The financial sufficiency rules issued by the Capital Market Authority’s decision in 2012 will continue to be enforced, until the date of the amended financial sufficiency rules on 09/10 1444 AH corresponding to 04/01/2023 AD, as well as exempting financial market institutions from applying the provisions of Articles 66 and 68. , and the sixty-ninth, and the requirement to prepare a report by the external audit office on the validity of calculating the minimum capital requirements contained in paragraph (b) of Article seventy-four of the financial adequacy rules issued by the Board’s decision in 2012 AD.

The approval of the Authority’s Board of the amended financial sufficiency rules came after the Authority published the draft of the amended financial sufficiency rules on the unified electronic platform for soliciting the opinions of the public and government agencies affiliated with the National Competitiveness Center (a survey platform) and on the Authority’s website for a period of (60) calendar days to seek public opinion on it.

It is noteworthy that the financial adequacy rules began to be applied by the Authority in 2013 to institutions engaged in securities activity, with the aim of setting a minimum capital requirement to ensure the availability of the necessary financial resources and reduce the size of the risks that may be exposed to it.

Amended financial sufficiency rules

Amended financial sufficiency rules

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