Including prohibiting incentives and gifts…a new regulation that regulates the behavior of financial market institutions

Strict Obligations

The regulations obligated registered persons to adhere to the general principles regulating the behavior of financial market institutions, with the requirement that they reside within the Kingdom unless the Authority decides otherwise. These obligations also apply to any person who performs a job that requires registration even if he is not officially registered.

The regulations stressed the necessity of stopping the registered person immediately. From practicing any job subject to registration when his registration is cancelled, with the institution being obligated to inform the Authority within seven days from the date of his cessation or termination of his relationship with it, using the approved form.

She explained that the suspension of registration applies immediately upon notification and until the Authority’s decision is issued, whether approving the cancellation, or transferring the person to another institution, or removing him from the register, with the right to grievance granted, and his continued subjection to the Authority’s supervision for two years for any previous violations.

Clear controls To practice securities activities

The regulation confirmed the application of its provisions to all securities business inside and outside the Kingdom if they are related to clients inside it, while requiring institutions to highlight that they have obtained the license in all their correspondence and advertisements.

The regulation prohibited the offering of gifts or incentives with the aim of influencing clients’ investment decisions, and it also prohibited accepting them if they resulted in a fundamental conflict with the institution’s duties, and considered any incentive provided through other parties as a direct incentive from the institution itself.

It also prohibited institutions from participating in any losses incurred by clients, in a way that enhances the independence of investment decisions and protects the market from unfair practices.

Regulating special commission under strict conditions

The regulation regulated special commission arrangements, permitting institutions to conclude them on the condition that they provide the best implementation conditions to clients, and that the benefits obtained from them are for their benefit, with clear disclosure in the terms of services, and that the fees are reasonable and justified.

The regulations stressed the necessity of maintaining the confidentiality of customer information, and not disclosing it except in specific cases, including the request of the competent authorities, the customer’s approval, or necessity to provide the service, or in the event that the information loses its confidential nature.

It obligated institutions to develop written policies and procedures to prevent the leakage of internal information, ensuring that access to it is limited to authorized persons only, while applying preventive arrangements commensurate with the nature and volume of activities.

It clarified that it is not considered a violation for the institution to deal in securities related to internal information if it is decided. between the concerned departments and the application of the necessary controls, and those in charge of trading or advice not being informed of this information.

Securities Advertisements

The regulations affirmed the invalidity of any condition that exempts the financial market institution from responsibility or limits it in contravention of the regulations, and also obligated it to provide adequate insurance coverage for the risks of professional errors, commensurate with the nature of its activities.

The regulations clarified that all advertisements related to securities are subject to its provisions, including pre-prepared advertisements that It aims to invite or encourage investors to engage in investment activity.

The institutions are obligated to ensure that these announcements meet all regulatory requirements before publishing them, and to have them approved by a competent official within the institution, ensuring the accuracy and clarity of the information and not misleading investors.