The Capital Market Authority Approves the Amended Prudential Rules
Thursday, January 05, 2023 at 5:35 PM
The Capital Market Authority's ("CMA") Board issued its resolution approving the amendments to the Prudential Rules (“Amended Rules”), which shall be effective as 10/09/1444 AH corresponding to 01/04/2023 G.
The Amended Rules aim to enhance the stability of the capital market institutions to further boost the confidence of the capital market participants and create an attractive investment environment to support national economy growth.
Also, amending the Prudential Rules comes as part of the CMA’s keenness, since its inception, on continuously regulating and developing the entities, subject to the CMA’s control, which carry out any of the securities business, enhancing the control procedures and prudential level of such entities, in addition to raising the efficiency of the resources management of such institutions to provide optimum services to their customers in accordance with the best international practices.
The main elements of the Amended Rules are updating the prudential requirements for carrying out any of the securities business, including updating the requirements of credit, market, operational and concentration risks.
The main elements also include updating the methodology used to calculate the minimum limit of capital adequacy, and facilitating the prudential requirements for investment management, arrangement, and advisory activities to be based on expenses, which is in line with the nature of such activities.
The Prudential Rules, issued by the CMA Board resolution in 2012, shall continue to be effective until the date on which the Amended Prudential Rules come into effect on 10/09/1444 AH corresponding to 01/04/2023 G. Also, exempting the capital market institutions from the provisions of Articles (66), (68), (69), and the requirement of preparing a report by the external audit firm regarding the computations validity of the minimum capital stipulated in paragraph (b) of Article (74) of the Prudential Rules issued by the CMA Board pursuant to its resolution in 2012.
The Capital Market Authority's ("CMA") Board approval of amended prudential rules came after the CMAhas published the Draft Amended Prudential Rules on the Unified Electronic Platform for Consulting the Public and Government Entities (Public Consultation Platform) affiliated with the National Competitiveness Center (NCC), and the CMA's website for public consultation for a period of (60) calendar days.
It is worth noting that the CMA has initiated, in 2013, the application of Prudential Rules on institutions carrying out the securities activities with the aim of specifying a minimum limit of capital requirements to ensure the availability of required financial resources and limiting the size of risks that may be incurred.
The Amended Prudential Rules can be viewed via the following link:
the Amended Prudential Rules