The Capital Market Authority (CMA) has recently released its annual report highlighting its achievements to regulate and develop the capital market in 2011 (1432/1433H).
Dr. Abdulrahman Al-Tuwaijri, chairman and CEO of the CMA, confirmed that the CMA continued its efforts to build a legal and legislative system that identifies the rights and obligations of all parties related to securities business. In the past few years, CMA published twelve implementing regulations that were topped in 2011 with the issuance of “The Resolution of Securities Disputes Proceedings Regulations”. They aim to regulate the procedures of prosecution and litigation before the Committee for the Resolution of Securities Disputes (CRSD) and the Appeal Committee for the Resolution of Securities Conflicts (ACRSC) to make sure that traders’ rights are all secured.
In 2011, the CMA Board decided that paragraph (b) of Article Ten of the Corporate Governance Regulations which is related to “laying down rules for internal control systems and supervising them” is mandatory for all listed companies. This is to instill the best practices in corporate governance as well as to develop the related standards and principles to create an environment that promotes the protection of shareholders’ rights.
Al Tuwaijri also explained in his statement in the CMA’s 2011 annual report that the Authority issued a resolution to apply a set of amendments on the “Anti-Money Laundering and Counter-Terrorist Financing Rules”. This comes under the CMA’s efforts to promote the capital market’s integrity and credibility, and to protect the Authorised Persons and their clients from illegal practices that might involve money laundering, terrorist financing, or any other criminal act.
He added that the CMA continued its efforts in developing and regulating securities. It also strengthened the capital market’s role in investing and financing by providing the flexibility needed in the procedures and legislations to accommodate listing and offering various securities and financial instruments. In 2011, the CMA approved applications for initial public offerings of six new companies, 74 private placement notifications, two debt instruments for two companies, rights issue offerings for five companies, one case of acquisition, one corporate capital reduction and the offering of bonus shares for ten listed companies. The total amount of these securities offerings stood at SR 21.8 billion. The number of companies listed on the exchange in the past year rose by 2.7 percent to 150 companies.
The CMA’s endeavors in improving the market’s efficiency and fairness and monitoring trades have paid off. The number of suspected violations of the Capital Market Law and its Implementing Regulations in 2011 decreased by 16.7 percent to only 35 cases. Moreover, the number of alerts from the electronic surveillance system decreased by 8.9 percent. The Authority’s success in broadening surveillance methods to boost the level of disclosure and transparency in the capital market led to an increase of 16.5 percent in the announcements by listed companies to 2,975 announcements last year. The number of complaints filed to the CMA witnessed a decrease of 23.2 percent as a solid indicator of big success in this aspect. .
Al Tuwaijri also emphasized that the capital market’s healthy and safe performance is taken into consideration with high importance by inspecting the Authorized Persons licensed by the CMA and ensuring that they fully comply with the Capital Market Law and its Implementing Regulations as well as full compliance with risk assessment measures. Hence, the CMA increased its inspection visits to the Authorised Persons during 2011 by 31 percent compared with 2010.
In its efforts to provide investor awareness programs, Al Tuwaijri pointed out that the CMA focused on children-dedicated programs in the past year with its awareness campaigns because it believes that today’s child is tomorrow’s investor. Based on this concept, an interactive website was launched for the “Smart Investor” program that includes several sections on the principles of money management, saving, buying and selling skills. All these topics are presented in an interactive and interesting manner to achieve the desired outcome.
He also mentioned the achievements in developing the CMA’s internal environment and a good example of that was ranking first for the second consecutive year on “Al-Eqtisadiah’s” list for the Best Governmental Work Environment nationwide. The CMA also received a global recognition in information security (ISO 27001). As for its social role, the CMA participated in three career day events at several universities and academic institutions. It also recruited 44 outstanding students, both males and females, to spend their co-op program as trainees with the CMA.
The chairman explained that, based on its belief in the importance of its mission and role in developing and protecting the capital market, the CMA works hard to continue its efforts and achievements. In 2012, it aspires to develop and update the rules and regulations to cope with the market changes in line with the best international practices and standards. The Authority will also work on developing the mechanisms and systems of market disclosure in order to convert to electronic forms applied in most advanced countries.
