As part of the Capital Market Authority's ("CMA") strategic objectives to develop the capital market and enhance the confidence of the participants in the capital market, and based on the Capital Market Law issued by Royal Decree No. (M/30) Dated 2/6/1424 H, the CMA Board issued its resolution to approve the amended Market Conduct Regulations, to be effective as of the date of their publication.
The amendments to the Market Conduct Regulations aim to enhance the protection of investors in securities from unfair or unsound practices that involve fraud, deceit, or manipulation. The amendments also aim to further develop the capital market's statutory environment and promote its stability, develop the procedures that would minimize risks associated with securities transactions, achieve protection for investors, and enhance confidence in the capital market. Moreover, this comes in line with the international best practices and standards to support the market's growth and prosperity.
The main elements of the amendments to the Market Conduct Regulations are:
a) Developing the provisions regulating the prohibition of acts or practices involving manipulation or deceit, by clarifying that the scope of such acts or practices shall include promoting the purchase of a security for the purpose of selling that security or promoting the sale of a security for the purpose of purchasing that security.
b ) Developing the provisions regulating the prohibition of insider trading and disclosure of inside information for the purpose of including front running trades. The information related to the orders entered or, that will be entered, on a security will be considered, when the other criteria stated in Part (3) of the Market Conduct Regulations are fulfilled, as inside information upon which the Capital Market Law prohibits disclosure or trading. This prohibition applies to, for example, but not limited to, a director, senior executive or employee of a capital market institution, and an authorised signatory or attorney-in-fact over the accounts of natural or legal persons from both the public and private sectors.
The approval of the amended Market Conduct Regulations comes after the CMA published the draft amendments of the Regulations on its website for a period of (30) calendar days for public consultations. The CMA also held, after publishing the draft amendments of the Regulations for public consultation, a workshop for a number of capital market institutions. The workshop included introducing and discussing these amendments and obtaining the comments and suggestions from the participants, as well as answering their questions and inquiries. The CMA has made several amendments based on the comments received. One prominent amendment of these amendments is clarifying that the manipulative and deceptive acts or practices shall include entering an order or orders for the purchase or sale of a security in order to affect the theoretical price of volatility auction, when committed for the purpose of creating a false or misleading impression of trading activity in a security or interest in the purchase or sale of the security, or for the purpose of creating an artificial bid price, ask price or trade price for a security.
The amended Market Conduct Regulations can be viewed via the following link:
Market Conduct Regulations
