Saudi Arabia’s CMA publishes draft CCP regulations
13 September 2019 Saudi Arabia
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Saudi Arabia’s Capital Market Authority (CMA) has published a draft regulation for central counterparties for public consultation.
The draft regulations aims to regulate securities clearing activities in the Kingdom and specify the requirements for obtaining an authorisation to carry out such activities.
Meanwhile, the regulations define clearing as the process of establishing each party's rights and obligations arising from securities trading.
This includes the calculation of net obligations and ensuring that financial instruments or cash are available to secure the exposures arising from such obligations.
According to CMA, this will contribute to introducing new securities classes and services to investors and guaranteeing the settlement and fulfillment of obligations of transactions parties.
In turn, this will further strengthen the current market infrastructure and enhance its efficiency, CMA explained.
During the preparation of the Draft Regulations, the CMA took into consideration the best international practices in this regard and the Principles for Financial Market Infrastructures (PFMI) issued by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO).
Following the publication of the provisional rules, interest market participants now have until 26 September to respond to the CMA with their opinion.
The CCP ruleset is the latest in a series of capital market reforms that have come under the auspices of the “Saudi Vision 2030”, which is a plan to reduce Saudi Arabia’s dependence on oil, diversify its economy and develop public service sectors, and is in pursuance to achieving the objectives of the Financial Sector Development Program (FSDP) 2020.
The FSDP seeks to develop the financial sector to support the development of the national economy by stimulating savings, finance, and investment.
The draft regulations aims to regulate securities clearing activities in the Kingdom and specify the requirements for obtaining an authorisation to carry out such activities.
Meanwhile, the regulations define clearing as the process of establishing each party's rights and obligations arising from securities trading.
This includes the calculation of net obligations and ensuring that financial instruments or cash are available to secure the exposures arising from such obligations.
According to CMA, this will contribute to introducing new securities classes and services to investors and guaranteeing the settlement and fulfillment of obligations of transactions parties.
In turn, this will further strengthen the current market infrastructure and enhance its efficiency, CMA explained.
During the preparation of the Draft Regulations, the CMA took into consideration the best international practices in this regard and the Principles for Financial Market Infrastructures (PFMI) issued by the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO).
Following the publication of the provisional rules, interest market participants now have until 26 September to respond to the CMA with their opinion.
The CCP ruleset is the latest in a series of capital market reforms that have come under the auspices of the “Saudi Vision 2030”, which is a plan to reduce Saudi Arabia’s dependence on oil, diversify its economy and develop public service sectors, and is in pursuance to achieving the objectives of the Financial Sector Development Program (FSDP) 2020.
The FSDP seeks to develop the financial sector to support the development of the national economy by stimulating savings, finance, and investment.
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