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The Saudi Arabian Capital Market Authority Announces The Approval Of The Securities Central Counterparties Regulations

Date 08/01/2020

As part of the Capital Market Authority's ("CMA") strategic objectives to develop the capital market, and in pursuance to achieving the objectives of the Financial Sector Development Program, and in line with the Saudi Vision 2030, and based on the Capital Market Law issued by Royal Decree No. (M/30) dated 02/06/1424 H, the CMA Board issued its Resolution to approve the Securities Central Counterparties Regulations ("Regulations") and amend the Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority, to be effective as of the date of their publication. This comes after the CMA has published the Draft Regulations on its website for public consultation for a period of (14) calendar days.
The Regulations aim to regulate securities clearing activities in the Kingdom and specify the requirements for obtaining an authorisation to carry out such activities, which will contribute to introducing new securities classes such as derivatives, and guaranteeing the settlement and fulfilment of obligations of transactions parties. This will in turn further strengthen the current market infrastructure and enhance its efficiency.

The Regulations define clearing as the process of establishing each party's rights and obligations arising from securities trading, including the calculation of net obligations and ensuring that financial instruments or cash are available to secure the exposures arising from such obligations.

During the preparation of the Regulations, the CMA took into consideration the best international practices in this regard and the Principles for Financial Market Infrastructures (PFMI) issued by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO).

The Regulations can be viewed via the following link:
Securities Central Counterparties Regulations