Saudi Arabia's Capital Market Authority (CMA) yesterday announced three important bylaws designed to encourage the public to invest in stocks with confidence, prevent fraudulent practices, and regulate the market, which is worth SR500 billion [U.S. $133.5 billion]. The new regulations, which deal with bond flotation, set out principles for the enrollment of bonds, and elucidate market procedures, will protect investors and preserve market credibility, while encouraging the formation of more joint stock companies and enhancing fair and transparent stock market dealings.
The new regulation on enrollment of bonds requires joint stock companies enlisted in the market to make frank and continuous statements while the regulation on flotation, affecting both private and public sectors, explains the types of issues acceptable to the market as well as the terms and conditions to be fulfilled by companies. The regulations prohibit false stock exchange deals and manipulation of opening and closing prices, and allow clients who suffer losses as a result of wrong information to claim damages against those who publish them. Details of the three by-laws are available on the CMAs website (cma.org.sa).
The stock market in Saudi Arabia has a long history; it was in 1954 that shares were first offered to the public. The market remained informal, however, until the mid-1980s when a commission was formed to regulate it. ‘Tadawul’, a new infrastructure for the market, was implemented in 2001; and since then, the market has grown significantly.
The all-share index of the Saudi stock market, the Arab world's largest, touched 8,385 points on Tuesday, November 30 – a record high - but slipped back, to close on Thursday at 8,158 points. Shares in Saudi Basic Industries Corporation (SABIC), the largest trading company in terms of capitalization, jumped to a record SR926.0 ($246.9) early in the week, but fell back yesterday. The index is still up 86 percent so far this year, its second year of strong growth, fuelled by high oil prices and cash liquidity in the world's biggest crude oil exporter.