CMA seeks public input on draft amendments to brokerage licensing requirement

Logo of The Capital Market Authority (CMA)

The Capital Market Authority (CMA) called on relevant and interested capital market players to share their feedback on the draft amendments to the licensing requirements for brokerage companies, outlined in the Capital Market Law.

These amendments focus on the minimum capital requirements and the legal structure that brokerages must adhere to, the market regulator said in a statement today, Jan. 21.

The consultation period will run for 30 days, ending on Feb. 20.

The proposed amendments aim to enhance the attractiveness of engaging in brokerage activities (currently performed by capital market institutions licensed to carry out dealing or custody business), fuel competition among market players, and stimulate the growth of the asset management industry.

This will be achieved by developing the services provided in dealing and custody activities to foster innovation and expansion within the Saudi capital market.

The draft amendments include referring the determination of the minimum capital requirements that brokerages must comply with when implementing regulations issued by CMA, in a way that provides the necessary flexibility in gauging capital requirements based on the business nature that these brokerages will be licensed to practice.

Currently, the Capital Market Law stipulates that the minimum capital must not be less than SAR 50 million.

Additionally, they entail referring the determination of the legal form required by brokerages under the implementing regulations issued by CMA, providing the necessary flexibility to define legal forms based on the nature of the activities licensed for these brokerages to practice. Currently, the Capital Market Law mandates brokerages to operate as joint-stock companies.

This is in addition to developing the activities of dealing and custody, enabling the introduction of innovative financial products and services that shall be licensed as per the requirements tailored to complement the features of such products and services, in accordance with the best global practices.

This move is expected to attract international brokerages to enter the Saudi market, thereby stimulating activity in this sector in line with the core pillars and strategic objectives of the Financial Sector Development Program.

The CMA emphasized that feedback from interested persons shall be taken into full consideration for the purpose of approving the final proposed amendments, which in turn shall contribute to enhancing and developing the market’s regulatory environment.

The proposed amendments to the brokerage licensing requirements are attached here: