Supervision And Inspection Of Persons Authorized To Engage In Securities Activities

What are the powers of the Capital Markets Authority in supervising and inspecting the persons authorized to engage in securities activities, as well as the persons registered with it?

Al-Rashed, Al-Hadlaq and Al-Roudan Group answers this question in accordance with what was stated in the executive regulations of the law establishing the Capital Markets Authority and Regulating Securities Activity No. 7 of 2010.

What is meant by authorized persons and registered persons?

An authorized person is a natural or legal person who has obtained a license from the Capital Markets Authority to engage in one or more of the following securities activities:

  1. stock exchange
  2. clearing agency
  3. Investment Portfolio Manager
  4. Collective investment system manager
  5. investment advisor
  6. underwriting agent
  7. custodian
  8. market maker
  9. A stockbroker registered in the stock exchange
  10. A stockbroker not registered in the stock exchange
  11. Investment Monitor
  12. credit rating agency
  13. asset valuation
  14. Qualified stockbroker registered with the stock exchange
  15. Any other activities specified by the Capital Markets Authority

A registered person means any natural or legal person registered with the Capital Markets Authority, and they are:

  1. Occupants of positions and positions required to be registered with the authorized person
  2. Account auditors registered with the Authority
  3. External Sharia audit offices registered with the Authority

Powers of the Capital Markets Authority

Below we will review the powers of the Capital Markets Authority to request information, control and inspection of persons authorized to engage in securities activities, as well as persons registered with it:

Information request

The Capital Markets Authority may request from any person information and documents related to securities activities or dealing in securities, as well as regulatory and governmental authorities, within the time period specified by it.

The Authority may also appoint or request the authorized person to appoint an auditor from among the auditors registered with it, for the purpose of preparing a report on a specific subject related to one of the activities of the authorized person, and this auditor must provide the Authority with a copy of his report, and the authorized person is obligated to pay the expenses and fees The observer, and providing any documents, information or assistance requested by the observer.

Control and inspection of authorized and registered persons

All authorized and registered persons are subject to supervision and inspection of their business by the Authority, and the instructions it issues in this regard. Securities transactions are also subject to supervision and inspection by the Authority, whoever the person who undertakes them is.

The Authority may conduct a periodic inspection by prior notification to ensure compliance with the provisions of the law establishing the Capital Markets Authority and its executive regulations and the policies and procedures in force. Inspection do the following:

  1. Inventory and compile the initial observations after the inspection is completed and discuss them with the person who was inspected.
  2. Preparing a preliminary report on the results of the field inspection, and presenting it to the person who was inspected, in order to respond and comment on the observations revealed to the inspection team, within ten working days from the date of receiving the report.
  3. Examining the observations made in the initial report after studying the response and commenting with the person who was inspected in order to establish procedures for correcting the observations within the time period determined by the authority.
  4. Preparing a final report on the results of the inspection, including all observations, and the authority may take appropriate disciplinary measures regarding the violations resulting from the report.

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