Trading Safety in the Saudi Financial Market: Concept, Application, and

Trading safety refers to a set of systems and procedures aimed at protecting investors and ensuring the integrity and transparency of operations in the Saudi financial market. In the local context, the concept includes ensuring the safety of operating systems, the effectiveness of technical infrastructure, and the application of strict governance controls to prevent manipulation or unlawful disclosure of information. The Capital Market Authority (CMA) oversees these aspects, establishing regulatory frameworks and monitoring their implementation through specialized compliance and supervisory units. One of the distinguishing features of the Saudi market is the focus on periodic disclosure by listed companies, prohibiting trading based on insider information, and ensuring speed and transparency in ownership transfer and transaction settlement. Additionally, the advanced technical systems managed by Tadawul provide a high capacity to handle massive trading volumes, with periodic tests conducted to ensure stability and reduce operational risks.

The Capital Market Authority was established as the primary regulatory body to oversee the financial market. The Authority sets strict regulations regarding financial disclosure, corporate governance, prohibiting trading based on insider information, and ensuring fairness among investors. The Authority imposes severe penalties for any illegal practices such as price manipulation or spreading false rumors. It continuously monitors the compliance of listed companies with periodic disclosure requirements and mandates financial intermediaries to apply the highest standards of transparency and protect client funds. This is reinforced by central clearing committees and specialized supervisory units that cooperate with law enforcement agencies when necessary. The Authority continuously seeks to develop legislation in line with international standards, enhancing the attractiveness of the Saudi market for foreign investors.

The technical infrastructure plays a pivotal role in ensuring trading safety and the continuity of the Saudi financial market's operations. The market relies on advanced electronic trading systems managed by Tadawul, which undergo continuous testing and updates to keep pace with increasing trading volumes and the diversity of financial products. In 2024, the system witnessed major technical updates that enhanced its flexibility and operational capacity, enabling it to handle a 30% increase in order volumes compared to the previous year. Despite a rare technical malfunction in July 2024, it was swiftly addressed, and the system was restored efficiently, confirming the market's readiness to face technical crises. This advanced infrastructure provides high data security, speed in order execution, and ensures accurate and reliable transaction settlements.

Investor protection in the Saudi financial market is a priority for the Capital Market Authority, which has established a set of guarantees and mechanisms to ensure the safety of shareholders' funds. These measures include regulating margin trading, imposing margin adequacy requirements, and implementing automatic trading halt systems (Circuit Breakers) in cases of severe volatility. Additionally, centralized clearing and settlement mechanisms overseen by the Saudi Arabian Monetary Authority and the Depository Center ensure the transfer of share ownership and the safe transfer of funds between parties. Insurance funds are also in place to compensate investors in cases of major malfunctions or significant financial distress, and trading on deferred funds without full coverage is prohibited. These guarantees enhance investor confidence and encourage broader participation in the market.

Clearing and settlement mechanisms are an essential part of trading safety. In the Saudi financial market, specialized entities such as the Depository Center and the Monetary Authority (SAMA) oversee the clearing and settlement processes to ensure the accuracy and speed of financial asset transfers. Transactions are settled within specified timeframes, ensuring that shares reach buyers and sellers receive their financial entitlements without delay. In 2024, the market recorded a significant decrease in settlement failures to less than 0.01% of total volumes, reflecting efficient clearing management. These measures reduce systemic risks and enhance market stability, especially during periods of increased trading volumes or sudden fluctuations.

Transparency and disclosure of material information form the foundation for ensuring fair trading in the Saudi financial market. Regulatory frameworks require all listed companies, such as Hail Cement (3001), to immediately disclose any significant events or changes in financial results. Quarterly and annual reports are published through official platforms such as Tadawul and the Capital Market Authority, allowing investors to access financial performance and strategic developments. This transparent environment reduces opportunities for unfair trading or exploitation of insider information, while enhancing investors' ability to make decisions based on accurate and equitable information.

The Capital Market Authority possesses extensive legal powers to impose penalties and fines on individuals or entities that violate regulations. Penalties include financial fines, temporary or permanent trading bans, and referral to the competent judicial authorities in cases of serious violations. The Authority collaborates with security and judicial entities to ensure the enforcement of laws and deter any attempts at manipulation or fraud in the market. These policies have played an effective role in reducing instances of manipulation and enhancing a fair and safe market environment for all participants.

The trading safety framework aligns with the goals of Saudi Arabia's Vision 2030, which aims to develop the financial sector and increase the private sector's contribution to the economy. By enhancing transparency, governance, and developing financial products, trading safety contributes to attracting foreign investments and improving the efficiency of national capital. The Authority also keeps pace with global changes and works to introduce new financial instruments (such as investment funds and futures contracts) and diversify funding sources, supporting market stability and making it more resilient to global economic shocks.

The Saudi financial market recorded a total market capitalization of 3.2 trillion Saudi riyals in 2024, with an annual trading volume reaching approximately 2.5 trillion riyals. The main market index (TASI) ranged between 9,800 and 10,000 points by the end of the year, benefiting from the entry of new companies and increased liquidity due to foreign investments. The foreign ownership share rose to 10% of the market capitalization, while local investors maintained a 90% share. Index funds and real estate asset funds witnessed significant growth, with their asset value reaching around 150 billion riyals. These indicators reflect market stability and the strength of a secure trading environment.

Hail Cement Company (symbol: 3001) is one of the leading companies in the Saudi cement sector, characterized by a moderate dividend policy and relative stability in financial performance. The average share price in 2024 was around 23 riyals, fluctuating between 20 and 26 riyals based on business results and sector developments. The company's market capitalization at the end of 2024 was estimated at about 6 billion riyals, reflecting its moderate position in the sector. The price-to-earnings ratio (P/E) was approximately 15 to 18, indicating improved operating margins and increased domestic demand. The company distributed cash dividends of 3 riyals per share in 2024, representing a high relative return. Government entities own about 40% of the company's shares, while financial institutions and individual investors hold the remaining shares. Management focuses on sustainability projects and expanding production lines and renewable energy.

The cement sector is one of the strategic sectors in the Kingdom, closely linked to the construction sector and Vision 2030 projects. The sector includes major companies such as Saudi Cement, Eastern Cement, Yanbu Cement, and Hail Cement (3001), along with unlisted companies. The market is characterized by a balance between supply and demand, with the government monitoring production and export levels to maintain local price stability. Companies face challenges such as fluctuations in raw material prices, intensified regional and international competition, and increasing environmental pressures. Companies are moving towards innovation in renewable energy and diversifying products to meet the requirements of major projects, such as NEOM and Qiddiya. Despite the challenges, the sector remains attractive due to significant government spending on infrastructure.

The Saudi financial market witnessed significant events in 2024-2025, including major technical updates in the trading system and the launch of awareness campaigns to promote responsible trading culture. In the cement sector, Hail Cement Company partnered with solar energy companies to cover part of its clean energy needs and announced an expansion in transportation and export lines to Iraq. The general assembly approved a 20% capital increase through the issuance of free shares, reflecting management's confidence in the company's growth. The Capital Market Authority also launched intensive regulatory activities to ensure trading safety after any technical malfunctions and confirmed that the market is prepared to face any future fluctuations.

Despite the strength of the trading safety framework, the Saudi market remains susceptible to certain risks such as price fluctuations, global economic events, or rare technical malfunctions in trading systems. The Authority continuously updates the technical infrastructure and imposes new controls as needed, such as enhancing margin requirements or activating automatic halt systems during severe fluctuations. Investors should familiarize themselves with the laws, follow market news from official sources, and diversify their investment portfolios to mitigate risks associated with sudden fluctuations.

The Capital Market Authority provides monthly reports and regulatory studies through its website, in addition to publishing decisions and urgent news on its official social media accounts. News about Hail Cement Company (3001) can be followed through the stock page on Tadawul (/stocks/3001/) or the company's official website. Specialized sites such as 'Argaam' and 'Tadawul Tech' also cover the latest analyses and sector developments. Investors are advised to rely on official sources to track any changes in regulations or urgent events that may affect trading safety or the performance of listed companies.