International securities business license requires establishing regional headquarters in Saudi Arabia

The draft regulatory framework for the international securities business license, published by the Capital Market Authority on the Istitlaa platform to gather feedback from specialists and the public, revealed that financial institutions seeking the license must obtain authorization from the Ministry of Investment to establish a regional headquarters in Saudi Arabia.

The framework aims to introduce the international securities business license and establish a regulatory structure with specific provisions for the license. Key elements include facilitating the requirements to obtain the license, such as legal structure and minimum paid-up capital, easing registration requirements for key roles applicable to licensed financial market institutions, facilitating financial adequacy requirements, and regulating applicable restrictions.

According to the draft, the applicant’s paid-up capital must cover expected expenses for one year, and the financial market institution must have its main headquarters in Saudi Arabia.

Under the consultation conditions, institutions holding the license will be limited to providing securities business services to the following client categories: non-resident foreigners, the Saudi government, governmental entities, entities with public legal personality under applicable regulations, financial market institutions, local banks, and insurance companies. Securities business services will be limited to securities issued outside Saudi Arabia and not listed domestically, as well as the management of securities issued or listed in the Kingdom. Client funds must be held in currencies other than the Saudi Riyal.

Mohammed El-Kuwaiz, Chairman of the Capital Market Authority Board, said the international license will enhance securities business practices by positioning Saudi Arabia as a global financial center and attracting financial market institutions wishing to conduct activities outside the Kingdom through regional headquarters based inside the country.

El-Kuwaiz invited all interested parties to submit public feedback on the draft regulatory framework for the international securities business license.