Under the "Capital Market Law" issued in 2003, the Capital Market Authority was established to oversee the regulation and development of the Saudi capital market and issue the regulations, rules, and instructions necessary to implement the provisions of the Capital Market Law.
The Capital Market Authority is a governmental authority with financial and administrative independence and reports directly to the Prime Minister. It has many powers, including regulating and developing the capital market; enhancing and developing the methods of agencies and entities operating in trading securities; protecting investors from unfair practices; working to achieve justice, efficiency, and transparency; establishing controls that limit risks; and developing, regulating, and monitoring the issuance and trading of securities.
The Capital Market Law outlines the legal status, objectives, and responsibilities entrusted to the Stock Exchange and the Securities Depository Center.
The law stipulates the establishment of the Saudi Exchange as a joint-stock company, making it the only entity authorized to engage in securities trading in the Kingdom of Saudi Arabia Saudi Stock Exchange Company (Tadawul) was established as a world-class company providing comprehensive and diverse capital services.
The law also stipulates that the market establishes a department called the Securities Depository Center to carry out operations of deposit, settlement, transfer, clearing, and registration of ownership of securities traded in the market. In 2016, the Securities Depository Center Company (Edaa), fully owned by the Saudi Tadawul Group, was established to execute operations of deposit, settlement, transfer, clearing, and registration of ownership of securities traded in the market.
In 2021, Saudi Tadawul was formed as a subsidiary fully owned by the Saudi Tadawul Group, following the transformation of Saudi Stock Exchange Company "Tadawul" into a holding company under the name Saudi Tadawul Group. "Saudi Tadawul" is responsible for listing and trading securities for local and international investors.
In the same year, the Capital Market Authority announced its strategic plan (2021-2023), focusing on making the Saudi capital market the main capital market in the Middle East and one of the most important capital markets in the world, and to be an advanced market attractive to local and foreign investment, enabling it to play a pivotal role in economic development and diversifying sources of income.
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