Regulation and oversight is designed to address any irregularities of information between all counterparties to transactions, and ensures smooth functioning of trading and clearing across markets, fostering strong investor confidence.
During 2022, the Regulatory Oversight and Authorization Division strengthened its oversight role, following the internally designed risk-based approach to conduct supervisory activities based on key risk indicators related to members’ processes. The Division conducted full cyclic, thematic, adhoc as well as scheduled supervisory inspections. A total of 22 member inspections were completed in 2022, while a circulars portal exclusively accessible for members was also launched to encourage greater adherence. The Regulatory Policy and Oversight Committee (RPOC) approved nine memberships during 2022, along with 44 new traders.
Additionally, as part of the Division’s role in developing an evolving regulatory authority matrix and compliance grid to identify authorities, obligations, and responsibilities entrusted to the subsidiaries, a total of 17 regulations, rules, and procedures were comprehensively reviewed during 2022. The Division also carried out two inspections across two subsidiaries to ensure their compliance against market and centre rules and regulations.
In order to minimize the impact of external changes and developments on our operations, the Capital Market Authority (CMA) introduced new regulations for dispute resolution in its capacity to exercise a degree of regulatory oversight on the Group. These new regulations are being adhered to by the Group and its subsidiaries under the guidance of both the Regulatory Oversight and Authorization as well as Legal Division.
While the introduction of derivatives required no change to regulatory procedures with the product being added seamlessly to our services, the derivative membership introduced to the onboarding process required the amendment of certain internal procedures, which were carried out accordingly.
The Division kept a close eye on all matters of regulatory violations, with a few isolated incidents requiring immediate intervention. These violations required serious discussions, written justifications and letters from members, with the Division conducting adhoc inspections as well as scheduled meetings and sessions to assess and mitigate other resulting and related concerns stemming from said incidents.
Other violations such as announcement time and forms, and technical failures and dis-connectivity were reported during 2022, and addressed without major incident.
Listing Rules were amended in December 2022 with the approval of the CMA in regard to transfers from the Main Market to the Nomu-Parallel Market, with the division raising recommendations for approvals of over 100 requests by the end of 2022, out of which 19 were new listing applications to the Main Market, and 67 were applications to the Parallel Market. A total of 13 direct listing applications to the Nomu-Parallel Market were approved by the RPOC. Notably, over 10,000 Issuers’ announcements were reviewed by the Division during 2022.
2023 and beyond
The Regulatory Oversight and Authorization Division will continue to be engaged in assessing, developing and sharpening regulatory frameworks in 2023 to ensure the Saudi market is more transparent, efficient and appealing to investors and issuers.
During 2022, The ROAD initiated the development of three advanced systems for issuers’ oversight, members’ authorizations, and members’ oversight, automating end-to-end procedures from application to approvals. These systems are scheduled to go live in 2023, greatly benefitting issuers and members while radically enhancing control and governance activities.