Is it permissible for the Capital Markets Authority to intervene in case of crises in the work of the stock exchange and clearing agency?
We answer this question in Al-Rashed, Al-Hadlaq and Al-Roudan Law Firm and Legal Consultations through what was stated in the law establishing the Capital Markets Authority and Regulating Securities Activity No. 7 of 2010 and its executive regulations regarding the regulation of the intervention of the Capital Markets Authority in case of crises in the work of the stock exchange and clearing agency.
First: The Capital Markets Authority intervenes in the event of a crisis in the work of the stock exchange
The Executive Regulations of the Law No. 7 of 2010 Establishing the Capital Markets Authority and Regulating Securities Activity indicated that in cases of disasters, crises and disturbances that could create extremely harmful effects in the market, as well as in the event that some traders practice misleading insinuations or signals, the authority has the widest powers to issue instructions aimed at To restore justice, transparency and efficiency to the market, and in particular, it may take any of the following measures:
- Suspension of trading in the Stock Exchange, or any listed security for a temporary period of time.
- Cancellation of trading for a specific period of time or canceling deals on a specific share.
- Issuing decisions to liquidate all or part of the balances or reduce them.
- Adjustment of trading days and hours.
- Amending or suspending the work of any of the Exchange’s rules.
In the event that the Stock Exchange does not comply with the decisions or instructions of the Capital Markets Authority issued under its authority in the executive regulations of the law establishing the Capital Markets Authority and regulating the activity of securities, the Authority may take what it deems appropriate to achieve regular trading or liquidate any position related to securities.
Second: The Capital Markets Authority, in case of crises, intervenes in the work of the clearing agency
According to the executive regulations of the Law No. 7 of 2010 establishing the Capital Markets Authority and Regulating Securities Activity, the Capital Markets Authority may, in cases of disasters, crises and disturbances that could create severe harmful effects in the market, issue instructions to amend or stop working on any of the clearing agency rules.
In the event that the clearing agency does not comply with the decisions or instructions of the Capital Markets Authority issued under its authority in the executive regulations of the law establishing the Capital Markets Authority and regulating the activity of securities, the authority may take any measures it deems necessary to maintain a fair settlement and achieve effectiveness of commercial transactions in securities or any category of them.
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