1- Integrity <1- Integrity: The licensed person conducts his/her business with integrity.
<Skill, care and diligence: The licensee conducts its business with skill, care and diligence. <Effective management and control: By taking all reasonable means to organize its affairs responsibly and effectively and adopting appropriate risk management policies and systems.
4. <Financial Adequacy: By maintaining adequate financial resources in accordance with the rules set by the Authority.
5. <5- Appropriate Market Behavior: By adhering to appropriate market conduct standards. <6- Protection of client assets: In this aspect, the regulation sets several requirements that the institution must take all measures and procedures to protect its clients' funds, including ensuring that there is no conflict of interest between the client and the institution that manages his/her funds.
7. <7- Cooperation with supervisory authorities: This includes disclosing to the regulator any event or material change to its organizational structure.
8. <8- Communicating with clients: By providing them with information in a clear, fair and non-misleading manner.
9. <9. Considering the interests of individual customers: By treating them fairly and justly, and considering their interests. Non-conflict of interest: by addressing conflicts of interest between him and his individual clients or between an individual client and another client fairly.
10- Non-conflict of interest: by addressing conflicts of interest between him and his individual clients or between an individual client and another client fairly. <11. Suitability for individual clients: By exercising due diligence to ascertain the appropriateness of his advice and management for any individual client to whom he provides such services.
<The Capital Market Authority (CMA) is keen to raise the degree of quality and safety in the work of licensed persons, and since the beginning of 2013, it started applying the (Financial Sufficiency Rules) to licensed persons to be added to the (Regulation of Licensed Persons) that regulates this activity in the Saudi Stock Exchange. These rules, which apply international best practices and standards in this field, aim to set minimum capital requirements to ensure the availability of financial resources necessary for the continuation of the licensee's business and to minimize the amount of risks to which it is exposed. These rules rely on the licensee maintaining a sufficient capital base to cover the minimum capital requirements. The amount of the minimum capital requirement is determined based on the amount of risks to which the licensee is exposed, such as credit risk, market volatility, and operational risk, so the minimum capital requirement increases as the licensee's exposure to these risks increases.
The KDIPA is keen to review the minimum capital requirements. The Authority is keen to review the financial statements and financial adequacy reports of licensed persons on a monthly basis to ensure their compliance with the financial adequacy rules. To enable securities companies to meet the solvency standards, the Authority allows licensed persons to obtain post-maturity loans from a related party or a third party to comply with the minimum capital requirements and support their activities under the conditions specified in the financial adequacy rules.
Minimum capital requirements increase as the exposure of the licensed person to these risks increases.
