The amendment of the Financial Market Institutions Regulations granted the Capital Market Authority the authority to take any steps it deems appropriate to ensure adequate protection for the rights of the financial market institution’s clients.
The final draft amendment (Okaz obtained a copy of it) revealed that the project aims to develop the provisions of the Financial Market Institutions Regulations in light of the Authority’s terms of reference under the Capital Market Law and the Bankruptcy Law issued by the Royal Decree, and to develop the regulating provisions for the Capital Market Institution to take a decision to dissolve it in accordance with the provisions of The Companies Law issued by the Royal Decree, in a way that contributes to enhancing investor protection, and developing everything that would enhance the confidence of participants in the financial market in support of its growth and prosperity.
The amendment clarified that among the rights of customers in the event of bankruptcy of a financial market institution that holds the funds and assets of customers or manages investment funds is that it is not permissible to include the funds and assets of customers to the bankruptcy assets of the financial market institution, and the funds and assets of customers are excluded from the provisions for suspending claims contained in the bankruptcy system, and in In the event of bankruptcy of a financial market institution that holds client funds or client assets, and does not, or may not have, sufficient client assets or client funds to fulfill its obligations to return such funds and assets to its clients, then in that case the clients’ claims related to any shortage of client assets and client funds shall have priority over all other creditors.
It was also proposed to replace the terms “insolvency”, “liquidation” and “settlement” with the word “bankruptcy” in line with the wording used in the bankruptcy law, and a proposal to add a general provision stipulating that the funds and assets of clients may not be included in the assets of the bankruptcy, with the exception of the funds and assets of clients from Provisions for suspending claims contained in the bankruptcy law, with the aim of confirming that it is not permissible for the financial market institution, the bankruptcy trustee, or any other person to include such funds and assets in the bankruptcy assets.
Determine the governing provisions
The amendment included the provisions contained in the provisions of the bankruptcy of the financial market institution or the decision to dissolve it from the list of financial market institutions with the aim of determining the provisions regulating the bankruptcy of the financial market institution in accordance with the terms of reference of the Authority under the Law and the Bankruptcy Law, and the regulating provisions for the financial market institution to take a decision to dissolve it in accordance with the provisions of the Companies Law.
And she explained that the market authority may appoint or oblige the financial market institution to appoint a third party to take any steps it deems necessary to protect the clients of the financial market institution, and the fees and expenses of that third party are collected from the private money of the financial market institution, and its fees and expenses are of priority debt determined for the fees and expenses of the bankruptcy trustee. According to the provisions of the bankruptcy law.
It was proposed to replace the provision that stipulates that the decision to appoint any liquidator related to the financial market institution shall not take effect unless the Authority approves it with a provision that stipulates that the Authority may request the court to dismiss the trustee and appoint a new trustee from the list of bankruptcy trustees or from others.