The Capital Market Authority (CMA) is one of the most important regulatory institutions in the Kingdom of Saudi Arabia, playing a pivotal role in building and developing the investment environment, ensuring transparency, and protecting investors' rights. Thanks to the legislative and regulatory frameworks established by the CMA, the Saudi market has become one of the most developed and attractive financial markets in the region, reflected in strong performance and increasing interest from local and international investors. As 2024 begins, the CMA has taken center stage through a series of reforms and new regulations, contributing to significant growth in managed assets, the number of IPOs, and foreign investment flows. This comprehensive article illustrates how the CMA contributes to regulating the financial sector, detailing its key achievements and indicators, and reviewing the latest developments and official statistics that support the Kingdom's position in global markets. It will also highlight investor protection and the role of the CMA in enhancing trader confidence, with clarifications on available investment tools and regulatory frameworks. If you wish to gain a deep understanding of the CMA's role in Saudi Arabia, this article provides you with everything you need to know in a professional and objective manner.
Definition of the Capital Market Authority and Its Regulatory Role
The Saudi Capital Market Authority is the government body responsible for regulating and developing the securities sector in the Kingdom of Saudi Arabia. The authority was established under the Capital Market Law issued in 2003, with its mission being to achieve fairness, transparency, and efficiency in the market, in addition to protecting investors and enhancing confidence in the investment environment.
The authority oversees all securities activities, including stocks, bonds, sukuk, investment funds, and derivatives contracts. It imposes rules and regulations on listed companies and licensed financial institutions, and monitors securities trading to ensure compliance with international standards. The authority works closely with other institutions such as the Saudi Arabian Monetary Authority (SAMA) to achieve comprehensive financial stability.
The authority's role is highlighted in building a transparent investment environment, where financial information and significant events are disclosed regularly. The CMA also seeks to develop the market infrastructure and support the Saudi Vision 2030 strategy, aiming to make the Kingdom a regional and international financial hub.
Legal and Regulatory Framework of the Capital Market Authority
The work of the Capital Market Authority is based on the Saudi Capital Market Law, which forms the legal foundation for all securities regulations in the Kingdom. This law includes detailed rules that define the authority's tasks and powers in regulating the market, including granting licenses to financial institutions, supervising offering and listing operations, and monitoring trades.
The authority periodically issues and updates executive regulations to ensure compliance with best international practices, focusing on disclosure, corporate governance, investor protection, and regulating trading operations. Recently, the authority issued a comprehensive package of amendments, such as updating rules for offering securities and continuous disclosures, investment account instructions, and regulating the issuance of real estate contribution certificates.
The authority also facilitates procedures for companies and investors through digital transformation and streamlining registration and licensing processes, which contributes to increasing the market's efficiency and attractiveness.
Achievements of the Authority in 2024: Numbers and Official Statistics
The year 2024 witnessed exceptional performance by the Capital Market Authority, with official data showing significant growth across various sectors:
- Managed financial assets exceeded 1 trillion SAR by the end of 2024, growing by 20.9% from the previous year.
- The number of investment funds rose to 1,549 funds, with over 1.72 million subscribers (an increase of 47%).
- The value of listed sukuk and bonds reached 663.5 billion SAR, growing by 20.6%.
- The authority approved 60 public offering requests (a 36.4% increase), and 44 new IPOs were listed.
- Net foreign investment flows increased to 218 billion SAR, and foreign ownership in stocks reached 423 billion SAR.
- The number of licensed financial institutions stood at 186, with revenues of 17 billion SAR and net profits of 8.8 billion SAR.
- 121 complaints were settled, with compensation payments totaling 389 million SAR.
- The Kingdom ranked first in market capitalization and shareholder rights globally according to the IMD 2024 report.
These figures reflect the authority's ability to support sustainable growth and provide a competitive investment environment on an international level.
Tasks and Powers of the Saudi Capital Market Authority
The Capital Market Authority undertakes several essential tasks to develop and regulate the Saudi financial market:
- Establishing regulatory frameworks for market operations, including initial offerings, listings, and trading.
- Supervising brokerage firms, investment funds, asset management companies, and all licensed financial institutions.
- Monitoring the financial disclosures of listed companies and ensuring their compliance with governance rules.
- Combating manipulation and fraud, investigating violations, and taking necessary actions.
- Regulating public offerings and IPOs, and facilitating new listings in both the main and parallel markets.
- Activating investor protection mechanisms, such as the compensation fund and resolving complaints.
- Collaborating with local and international entities to enhance market efficiency and improve its global ranking.
Through these powers, the authority aims to provide a fair and transparent environment that attracts local and international capital.
Development of Investment Funds and the Authority's Role in Regulating Them
The investment fund sector in Saudi Arabia has witnessed unprecedented growth thanks to the policies of the Capital Market Authority. By the end of 2024, the number of public and private funds reached 1,549 funds, with the number of subscribers exceeding 1.72 million investors. This growth reflects the expansion of investment options and increased awareness among individuals and institutions about the importance of collective investment.
The authority regulates this sector by issuing licenses for funds, monitoring their performance, and ensuring compliance with disclosure and governance rules. It has also developed specific regulations to organize real estate investment funds and exchange-traded funds, creating new opportunities for investors.
The authority also seeks to enhance transparency by requiring funds to publish periodic reports and update information related to performance and risks. These measures have led to increased investor confidence and improved sector performance overall.
Regulating the Sukuk and Bond Market and Expanding the Investor Base
In recent years, the Capital Market Authority has focused on developing the sukuk and bond market, believing in its role in diversifying funding sources and deepening the financial market. In 2024, the total value of listed sukuk and bonds reached 663.5 billion SAR, an increase of 20.6% from the previous year.
The authority issued the largest package of regulatory amendments to enhance the attractiveness of the debt market, such as easing sukuk issuance requirements and expanding the category of eligible investors. It also introduced new debt instruments compliant with Islamic law, making the market more inclusive and appealing to institutions and individuals.
These initiatives aim to enable companies to obtain long-term financing, support infrastructure projects and economic development, while protecting investor rights and providing a transparent and fair trading environment.
Foreign Investment in the Saudi Market and the Authority's Role in Enhancing It
The Saudi financial market has seen a notable increase in foreign investment flows thanks to reforms by the Capital Market Authority. By the end of 2024, net foreign investment flows reached 218 billion SAR, and foreign ownership in listed stocks amounted to 423 billion SAR (11% of free float shares).
The authority has taken a series of measures to stimulate foreign investment, including easing entry conditions for the main market and updating regulations to facilitate disclosure and licensing processes. It has also worked to align the market with international standards, contributing to the elevation of the Saudi market's ranking in MSCI and FTSE indices.
These efforts enhance the confidence of international investors, attract foreign capital, and support economic diversification within the targets of Vision 2030.
Investor Protection: Complaints, Compensation, and Law Enforcement
The Capital Market Authority places investor protection at the top of its priorities. The authority has developed a comprehensive system for receiving complaints, investigating them, and providing compensation when harm is proven. In 2024, 121 complaints were addressed, and 389 million SAR in compensation was disbursed to 921 beneficiaries.
Additionally, the authority addressed 171 cases of violations of laws and regulations, reducing the average financial litigation period to 4.4 months, ensuring swift justice for investors. The authority also enforces immediate disclosure of significant events and monitors trades to prevent manipulation or trading based on insider information.
The authority also seeks to educate investors about their rights and obligations, providing direct communication channels for submitting complaints or inquiries through its digital platforms.
Trends in IPOs and Listings in the Financial Market
The year 2024 was an active year for IPOs and listings thanks to the policies of the Capital Market Authority. The authority approved 60 public offering requests, including 40 in the parallel market (Nomu) and 16 in the main market, with 44 new companies listed.
This dynamic activity reflects companies' confidence in the market's ability to provide necessary financing and indicates an improvement in the regulatory environment. The authority worked to facilitate offering procedures and simplify disclosure requirements, encouraging startups and medium-sized companies to approach the parallel market, while the main market attracted large companies.
These increasing listings contribute to deepening the market, diversifying financial instruments, and increasing opportunities for investors across various categories.
New Regulatory Developments and Instructions 2024-2025
In 2024, the Capital Market Authority issued several new instructions and regulations in response to market changes and investor needs, including:
- Instructions for issuing real estate contribution certificates, regulating the issuance and trading of real estate sukuk.
- Amendments to the financial institutions law and investment account instructions.
- Updates to the rules for public joint-stock companies and continuous disclosure rules.
These amendments aim to enhance transparency, facilitate the entry of new investors, and expand available investment options. The authority also launched projects to support crowdfunding and exchange-traded real estate funds, focusing on developing environmental, social, and governance (ESG) disclosure standards in line with global standards.
These efforts keep pace with technological and financial developments and support the Kingdom's position as an advanced regional financial market.
The Authority's Strategic Plan 2024-2026 and Its Goals
In September 2024, the Capital Market Authority launched a strategic plan for the period 2024-2026 focusing on three main pillars:
1. Enhancing the attractiveness of the financial market and attracting local and foreign capital.
2. Raising the level of investor protection, ensuring swift litigation and enforcement of rights.
3. Promoting financial and technological innovation, and developing new investment tools such as crowdfunding and exchange-traded real estate funds.
The plan includes initiatives to improve electronic trading systems, develop governance rules, and adopt international transparency standards. It also aims to support market sustainability and diversify financial products in line with Vision 2030.
Implementing this plan is a significant step towards enabling the Saudi market to become a regional and global financial hub.
International Cooperation and the Global Position of the Saudi Market
The Capital Market Authority has strengthened cooperation with international bodies and global financial institutions to align the Saudi market with the best international standards and practices. This has led to an improvement in the Kingdom's ranking in competitiveness indices, where it ranked first in several indicators in the IMD 2024 report.
These indicators included market capitalization, shareholder rights, and venture capital. Additionally, 8 out of 12 global financial market indicators for Saudi Arabia improved during the year.
Furthermore, the authority is considering opening the main market to all foreign investors, which would enhance liquidity levels and strengthen the Kingdom's position as a global financial center. The authority continues to update regulations in accordance with recommendations from international organizations such as MSCI and FTSE.
The Authority's Impact on Developing the Financial Sector and Achieving Vision 2030
The Capital Market Authority plays a pivotal role in supporting the goals of Saudi Vision 2030, particularly in the sector of economic development and diversifying income sources. The authority has contributed to deepening the financial market, increasing investment options, and encouraging companies to enter the stock exchange.
The authority's reforms have enhanced the market's attractiveness to international investors and increased foreign capital inflows, supporting quality investments and infrastructure. Governance and investor protection measures have also raised levels of trust and transparency, reflected in improved financial performance indicators and the Kingdom's advanced global rankings.
The authority continues to work on developing the digital infrastructure of the market and stimulating financial innovation to make the Kingdom a key center for financial and investment services in the region.
الخلاصة
Through this comprehensive reading of the role of the Saudi Capital Market Authority, it is clear how the authority serves as a cornerstone in enhancing transparency, protecting investors, and developing the financial market according to the highest international standards. Thanks to its regulatory and reform efforts, the Saudi market has witnessed remarkable growth in managed assets, investment flows, and the expansion of financial instruments, with notable developments in investor protection and expedited litigation procedures. As the strategic plan for 2024-2026 continues to be implemented, the authority emerges as a driving force in achieving the goals of Vision 2030 and diversifying the national economy.
It is important to emphasize that investing in financial markets requires a deep understanding of regulations and laws. Therefore, it is always advisable to consult a licensed financial advisor before making any investment decisions. The SIGMIX platform provides educational content and up-to-date data to help investors track market developments and understand regulatory changes, but the investment decision remains a personal responsibility that requires careful study and consultation with specialists.
الأسئلة الشائعة
The Saudi Capital Market Authority is responsible for regulating and developing the securities sector in the Kingdom, establishing the legislative and regulatory framework for the Tadawul (stock exchange) and parallel markets. Its powers include supervising brokerage firms, investment funds, and asset management companies, reviewing and approving offering and listing operations, and monitoring the financial disclosures of listed companies. The authority also handles complaints, issues executive regulations, and addresses market violations, while ensuring transparency and protecting investors' rights. All these efforts aim to achieve a fair and secure market environment.
By the end of 2024, the number of licensed public and private investment funds in the Saudi market reached approximately 1,549 funds. This figure indicates the expansion of investment options and the increasing awareness of investors regarding the importance of collective investment. The number of subscribers in these funds also exceeded 1.72 million investors, showing significant growth compared to previous years, reflecting the authority's successful regulatory efforts in developing this vital sector.
Financial assets under management in the Saudi market exceeded 1 trillion SAR by the end of 2024, achieving a growth rate of 20.9% compared to the previous year. These assets include investment portfolios and various types of funds, indicating the expansion of the investment base and the increasing confidence of local and international investors in the Saudi financial market.
The total value of listed sukuk and bonds in the Saudi financial market reached approximately 663.5 billion SAR by the end of 2024, reflecting a 20.6% increase from the end of 2023. This growth is attributed to the regulatory reforms undertaken by the authority, expanding the investor base and easing issuance requirements, making the sukuk and bond market attractive to institutions and investors seeking safe debt instruments.
The number of licensed financial institutions by the Capital Market Authority reached 186 institutions by the end of 2024, including brokerage firms, investment funds, and investment banks. These institutions achieved total revenues of approximately 17 billion SAR, with net profits amounting to 8.8 billion SAR in the same year, reflecting the improved performance of the financial sector and the expansion of its activities.
In 2024, the Capital Market Authority issued new instructions such as regulating real estate contribution certificates, amendments to the financial institutions law, and investment account instructions. It also updated the rules for public joint-stock companies and continuous disclosure rules. These updates aim to enhance transparency, facilitate the entry of new investors into the market, and expand available investment options, aligning with international standards in governance and disclosure.
The authority focuses on protecting investors by enforcing transparent disclosure, promptly receiving and resolving complaints, and providing compensation when harm is proven. It also takes strict measures against manipulation or fraud and continuously monitors trades. In 2024, compensation payments totaled 389 million SAR, and decisions were issued against 171 violators, with the average litigation period reduced to 4.4 months to ensure swift justice.
The Saudi Capital Market Authority approved 60 public offering requests in 2024, including 40 in the parallel market (Nomu) and 16 in the main market. A total of 44 new companies were listed during the same year, reflecting increased activity from companies entering the market and diversifying investment options for investors.
The Kingdom ranked first among G20 countries in market capitalization, shareholder rights, and venture capital indicators according to the Global Competitiveness Report (IMD) 2024. Additionally, the Kingdom improved in 8 out of 12 global financial market indicators, confirming the success of regulatory and economic reforms in enhancing the global position of the Saudi market.
The Saudi Capital Market Authority provides official news and data through its website (cma.gov.sa), where annual reports, regulatory announcements, and recent statistics can be followed. The Tadawul website (saudiexchange.sa) also offers real-time data on prices and trades. Investors are advised to rely on these official sources to stay updated on developments and make decisions based on reliable information.