50 million riyals as a minimum capital.. Strict controls for licensing financial market institutions – urgent
AdoptedThe regulation governing , which includes an integrated system of regulatory principles and controls aimed at increasing performance efficiency, enhancing integrity and transparency, in addition to tightening control over , through precise requirements for licensing, strict standards for continued activity, and clear mechanisms to protect investors’ rights.
Article Five stipulates that the general principles contained in the regulations represent the basic framework for the standards of behavior that financial market institutions are required to adhere to, in order to ensure that their work is carried out according to the highest levels of integrity and professionalism.
Effective risk management policies
The regulations obligate institutions to work with integrity and carry out their activities skillfully. Care and diligence, with the need to enhance the effectiveness of management and oversight by organizing its affairs efficiently and adopting effective risk management policies.
It also stressed the importance of financial adequacy, commitment to appropriate behavior in the market, and ensuring the protection of clients’ assets.
It also stressed the necessity of cooperating with the regulatory authorities and disclosing any fundamental changes, in addition to the commitment to clear and fair communication with clients, taking into account their interests, dealing with cases of conflict of interest fairly, and verifying the suitability of the services provided to each client. Client.
Precise requirements for obtaining a license
With regard to licensing procedures, the regulations clarified that the applicant is subject to its provisions from the date of application, whether it is an existing entity, founders, or controlling partners in the event that it has not yet been established.
It required that the application be submitted according to the approved forms accompanied by the required documents, with the need to prove the applicant’s ability to carry out the activity in terms of resources, expertise, and operational and technical capabilities, in addition to the availability Qualified cadres who possess integrity and competence.
The forms of entities eligible to obtain a license were specified, which include companies affiliated with local banks, joint stock companies, or affiliated with financial institutions, with the requirement that the headquarters and management be located within the Kingdom.
Strict financial requirements
The regulations approved a minimum capital according to the nature of the activity, amounting to 50 million riyals for dealing and custody activities, and 20 million riyals for investment management activities and fund operation, while For arranging and consulting licenses, capital is required to cover operational expenses for one year.
It stressed the necessity of continuous financial adequacy, and the payment of the annual financial compensation specified by the Authority, to ensure the continuity of the license.
The regulations granted the Authority expanded powers to study license applications, including conducting investigations, summoning applicants, requesting additional information within a specific period, and verifying the validity of the data provided.
She explained that the Authority issues Its decision shall be made within 30 days of completing the requirements, whether with full approval, conditional approval, or rejection, with a statement of reasons, while prohibiting any party from practicing the activity before obtaining the official license.
Not being exposed to bankruptcy
The regulations stressed that the continuation of the license depends on the institution’s ability and permanent suitability, according to standards that include the competence, integrity, and experience of the employees, and the absence of any precedents related to fraud or violating the regulations, in addition to the sound financial position and not being exposed to bankruptcy during the years.
It obligated institutions to obtain the Authority’s approval before making any amendment to the capital.
The regulations stressed the need for institutions to commit to practicing licensed activities only, with the possibility of practicing related businesses provided that they do not conflict with regulatory obligations or require additional licenses.
It allowed the provision of advisory services in financial planning and wealth management, in addition to automated advisor services, on the condition of diversifying investments and subjecting foreign securities. For similar regulatory oversight, and clear disclosure of work mechanisms and risks.
Procedures for amendment, cessation, and cancellation of the license
With regard to amendments, the regulations required obtaining the Authority’s approval for any change in licensed activities, with the request being studied within 30 days.
It organized temporary cessation procedures, whereby the Authority must be notified at least 45 days in advance, with an explanation of the reasons and potential effects on customers and the measures taken. To protect them, provided that the period of suspension does not exceed 12 months.
It obligates institutions, upon final cessation or requesting cancellation of a license, to notify the Authority and customers, and to ensure the termination or transfer of pending work, while taking the necessary measures to protect customer funds.
The regulation stipulates that institutions will continue to be subject to the Authority’s supervision for a period of two years after cancellation of the license in relation to previous violations, with the possibility of suspending the license in the event of cessation of activity for specified periods.
The regulation obliges institutions Notifying the Authority of any change in control or intention to acquire, with the necessity of obtaining prior approval, to ensure transparency and prevent any negative impact on market stability.
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