JEDDAH, 16 March 2003 — The establishment of a securities commission in Saudi Arabia will follow the enactment of the capital markets law with authority to regulate all aspects of the capital market.
The commission will be entrusted with the regulation and control of the market as well as implementation of the regulations and development of bylaws, rules and instructions, according to Saudi Arabian Monetary Agency Deputy Governor Jammaz Al-Suhaimi.
With the creation of a securities commission and a stock exchange, the role of the capital market will grow, strengthening the national economy, Al-Suhaimi says in the annual review of the Saudi Equity Market for 2002.
“The proposed stock exchange will be managed by the private sector, and incorporate the ‘securities depository center,’ responsible for the settlement, clearing, depository and registration of securities traded in the market,” he said.
As to the organizational, supervisory and institutional aspects of the market, the local economy has recently witnessed massive structural enhancements. Issuance of the new “capital markets law” is considered to be one of “the most significant corrective measures taken during the year representing the legislative organizational framework for the capital market,” Al-Suhaimi said. “Having completed its review of the new law, the Shoura Council approved and forwarded it to the Council of Ministers late in 2002, in anticipation of enactment in 2003.”
The capital market witnessed significant changes during 2002 and experienced unprecedented increases in the circulation of capital, as reflected in trading volumes.
Total stock turnover by value amounted to SR133.8 billion, marking an increase of 60 percent over the previous year; the number of shares traded doubled in comparison to 2001, amounting to 1.7 billion; and the total number of transactions reached 1.03 million, exceeding the one million level for the first time, an increase of 71 percent over a year earlier.
Market capitalization amounted to SR281 billion at the year-end, a 2.2 percent increase over the previous year. The massive growth in market volumes follows the successful implementation of a new market infrastructure, “Tadawul,” on Oct. 6, 2001. The Tadawul infrastructure incorporates a fully integrated trading, depository, clearing and settlement system. Many new features have been introduced. In order to increase the ability and efficiency of brokers, Tadawul introduced a requirement for all traders to attend training courses and sit and pass a trader examination, which focuses on compliance with market regulations.
