The Financial Market reduces capital requirements for custody and securities dealing activities
The Capital Market Authority announced the publication of a draft amendment to the Financial Market Institutions Regulations and the Securities Business Regulations and AmendmentsReducing the capital for the activity of dealing as an agent to 10 million riyals, after the minimum for the entire dealing activity was 50 million riyals in the previous regulations.
The proposed amendments revealed a reduction in the minimum capital for the custody activity to become 20 million riyals instead of 50 million riyals.
The Authority indicated setting a minimum of two million riyals for arrangement work that includes preserving clients’ funds in the context of practicing crowdfunding with securities.
Tayseer Licensing requirements
The Authority pointed out that the project seeks to facilitate licensing requirements and starting to practice work by dispensing with some information and documents. This exemption includes canceling the requirement to provide conditions for providing services within the licensing application for applicant institutions.
The new amendments strengthened the technical requirements by expanding the scope of registration of the information technology officer position to include financial market institutions that rely on technology platforms to provide their services. The Authority obligated these institutions to establish arrangements that ensure their ability to manage the risks of technology platforms and information security, with the need to test them at least once a year to ensure their effectiveness.
Developing Know Your Customer Requirements
The Capital Market Authority developed Know Your Customer requirements by linking them to the classification of money laundering and terrorist financing risks associated with the customer. Three classification models were identified, including low, medium and high risks, to ensure the accuracy of the evaluation of its clients.
The amendments granted financial market institutions, whose work is limited to providing advice, the authority to practice other professions or businesses according to specific controls.
Flexibility in combining functions
The Authority added greater flexibility in combining registered functions, in addition to developing the standards of capacity and suitability applied to the financial market institution, license applicants and registered persons.
The updated list of terms included amending the definition of control. To mean owning a percentage equal to 30% or more of the voting rights or the right to appoint 30% of the members of the administrative body.
This amendment comes compared to the 25% applicable in the current text of the regulations.
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