Capital Market Authority

The Capital Market Authority is a governmental authority tasked with overseeing and supervising the development and regulation of the capital market in the Kingdom of Saudi Arabia. The essence of its work is to protect dealers and investors in securities from unfair and unsound practices.

The Capital Market Authority was established by a law issued by a Royal Decree on August 1, 2003, and it has financial and administrative independence, and is directly linked to the Prime Minister.
The main headquarters of the authority is located in the capital, Riyadh. It consists of several general departments and agencies that regulate the work of the authority. It is managed by a board composed of five full-time members appointed by Royal Order.

The origins of the capital market in the Kingdom trace back to the 1950s, but it was informal and remained so until the government established the fundamental regulations for the market in the 1980s.

The Capital Market Authority has a set of powers, including issuing licenses for the establishment of special-purpose entities, developing and enhancing the methods of agencies and entities involved in securities trading, developing controls to mitigate the risks associated with securities transactions, and monitoring the issuance and trading of securities.
Furthermore, the authority plays a role in issuing regulations, rules, and instructions necessary for the implementation of the provisions of the Capital Market Law, and ensuring appropriate disclosure and transparency for companies listed in the market.

The chairman of the Board of Directors of the Capital Market Authority is appointed by a Royal Order at the rank of minister. The laws on the ownership of foreign investors, investment funds, company announcements, the rules on the offer of securities, corporate governance, and market conduct represent the most important legal foundations of the authority's work.
On March 19, 2007, the Council of Ministers approved the establishment of the Saudi Exchange (Tadawul), which is the only entity in the Kingdom authorized to operate as a securities market, where securities are listed and traded.
The market joined as an associate member of the International Organization of Securities Commissions and a member of the World Federation of Exchanges. Its capital amounts to SAR1.2 billion, divided into 120 million shares, all of equal value, with a nominal value of SAR10 each. All shares are cash shares fully subscribed by the Public Investment Fund.

In 2016, the Securities Depository Center Company (Edaa) was established under the Saudi Companies Law as a closed joint-stock company, wholly owned by the Saudi Exchange (Tadawul).