The Saudi Arabian central bank is to step up its supervisory power over the country’s financial sector in a bid to enhance financial stability.
Saudi Arabia’s Capital Market Authority signed a cooperation agreement with the country’s Monetary Agency on Sunday, in order to coordinate the oversight of the banking industry.
The agreement comes as the country decides whether to open up its stock market to direct foreign investment.
According to the agreement, both Riyadh-based bodies will coordinate supervision of corporate governance, risk management, initial public offerings, merger and acquisition regulations and Islamic bond issuance as well as the exchange of information.
Currently the CMA is financially, legally and administratively independent from the government and reports directly to the Saudi Arabian prime minister. The body sets up rules for the capital markets, ensures compliance and also regulates the Saudi Stock Exchange, called the Tadawul.
The Memorandum of Cooperation was signed by CMA chairman Adbulrahman Al-Tuwaijri and SAMA governor Fahd Al-Mubarak and states that both authorities must cooperate on any new rules and regulations on common issues or on any changes made.
Public companies in the banking and insurance sectors will be overseen by both bodies and be subject to accounting standards set up by SAMA and CMA.
“The MoC is considered to be a positive step of coordination between financial governmental bodies in Saudi Arabia to develop the financial sector and ensure its efficiency and prosperity,” the CMA said.
A high level standing committee will be set up by both regulators to see that the MoC is properly carried out.
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