Tadawul trading screen
The Capital Market Authority (CMA) stepped up its regulatory activity recently, launching a number of initiatives for public consultation with market participants. 
The proposals cover areas that directly affect investors and companies, as well as trading mechanisms.
The activity follows the Royal Order issued on Aug. 13, appointing Mazen bin Turki Al-Sudairi as the Capital Market Authority’s (CMA) Chairman with the rank of Minister.
Since his appointment, the CMA put several regulatory initiatives out for consultation, including improving IPO practices, regulating algorithmic trading, regulating dealing activities in financial markets outside the Kingdom, and regulating earnings discussion meetings for listed companies.
As the market continues to evolve, a broader question arises:
What other areas would investors like to see developed next?
Here are some topics that could be considered for discussion:
Results announcements — Can the waiting time be reduced?
Listed companies are required to announce their results within specified regulatory deadlines. However, some companies use most of the available period, leading in some reporting seasons to a concentration of announcements toward the end of the deadline.
The issue is not necessarily the length of the deadline itself, as the period allowed for preliminary results announcements on Tadawul is comparable to, or shorter than, the periods applied in a number of regional and global markets.
Would it be useful for companies to announce the expected date of their results in advance, with sufficient notice, and disclose any changes to that date?
Could this help reduce uncertainty for investors and ease the concentration of announcements in the final days?
Disclosure quality — Is there enough information to make informed decisions?
The nature and level of detail in company disclosures vary from one company to another, particularly announcements relating to contracts, projects, acquisitions, expansions and operational changes, as well as explanations of financial results.
In some cases, investors know that a company has signed a contract or launched a project, but may not have enough information to assess its expected impact on the business.
Should disclosures provide more detail on the expected financial impact and when that impact is likely to be reflected in the results, where it can be estimated reliably?
Do investors also need clearer explanations of the operational factors behind material changes in results, rather than simply stating the reasons for an increase or decline?
Companies with prolonged underperformance — Is explaining each quarter enough?
Companies are required to explain the main reasons for changes in their results. But the question becomes more important when declining profits or losses persist over several reporting periods.
Is it enough to repeat the reasons for the decline from one quarter to the next?
Or, when the deterioration continues over several periods, should companies provide a broader explanation of the measures management is taking to address the situation and the factors that will determine future improvement?
Daily price fluctuation limit — Is it time for a review?
The Main Market applies a daily price fluctuation limit of ±10% to share prices after the first three trading days following listing.
As the market evolves, questions may arise over whether the current limit remains appropriate in the future.
Would it be appropriate to consider widening or removing the fluctuation limits and allowing supply and demand to play a greater role in price movements?
Or do the current limits remain an important tool for containing sharp price movements?
The discussion could also extend to alternatives used by other markets, such as temporary trading halts when prices move sharply, rather than relying solely on a fixed daily limit.
Have another suggestion? Share it in the comments.
What change would be most beneficial to you as a Tadawul investor?
Tadawul trading screen
The Capital Market Authority (CMA) stepped up its regulatory activity recently, launching a number of initiatives for public consultation with market participants.
The proposals cover areas that directly affect investors and companies, as well as trading mechanisms.
The activity follows the Royal Order issued on Aug. 13, appointing Mazen bin Turki Al-Sudairi as the Capital Market Authority’s (CMA) Chairman with the rank of Minister.
Since his appointment, the CMA put several regulatory initiatives out for consultation, including improving IPO practices, regulating algorithmic trading, regulating dealing activities in financial markets outside the Kingdom, and regulating earnings discussion meetings for listed companies.
As the market continues to evolve, a broader question arises:
What other areas would investors like to see developed next?
Here are some topics that could be considered for discussion:
Results announcements — Can the waiting time be reduced?
Listed companies are required to announce their results within specified regulatory deadlines. However, some companies use most of the available period, leading in some reporting seasons to a concentration of announcements toward the end of the deadline.
The issue is not necessarily the length of the deadline itself, as the period allowed for preliminary results announcements on Tadawul is comparable to, or shorter than, the periods applied in a number of regional and global markets.
Would it be useful for companies to announce the expected date of their results in advance, with sufficient notice, and disclose any changes to that date?
Could this help reduce uncertainty for investors and ease the concentration of announcements in the final days?
Disclosure quality — Is there enough information to make informed decisions?
The nature and level of detail in company disclosures vary from one company to another, particularly announcements relating to contracts, projects, acquisitions, expansions and operational changes, as well as explanations of financial results.
In some cases, investors know that a company has signed a contract or launched a project, but may not have enough information to assess its expected impact on the business.
Should disclosures provide more detail on the expected financial impact and when that impact is likely to be reflected in the results, where it can be estimated reliably?
Do investors also need clearer explanations of the operational factors behind material changes in results, rather than simply stating the reasons for an increase or decline?
Companies with prolonged underperformance — Is explaining each quarter enough?
Companies are required to explain the main reasons for changes in their results. But the question becomes more important when declining profits or losses persist over several reporting periods.
Is it enough to repeat the reasons for the decline from one quarter to the next?
Or, when the deterioration continues over several periods, should companies provide a broader explanation of the measures management is taking to address the situation and the factors that will determine future improvement?
Daily price fluctuation limit — Is it time for a review?
The Main Market applies a daily price fluctuation limit of ±10% to share prices after the first three trading days following listing.
As the market evolves, questions may arise over whether the current limit remains appropriate in the future.
Would it be appropriate to consider widening or removing the fluctuation limits and allowing supply and demand to play a greater role in price movements?
Or do the current limits remain an important tool for containing sharp price movements?
The discussion could also extend to alternatives used by other markets, such as temporary trading halts when prices move sharply, rather than relying solely on a fixed daily limit.
Have another suggestion? Share it in the comments.
What change would be most beneficial to you as a Tadawul investor?
