Prospects and Challenges of the rules and regulations of the Saudi Research Paper

Prospects and Challenges of the rules and regulations of the Saudi Capital Market - Research Paper Example Distinguishing characteristics take account of spreading out of the market to a round the clock global trading cycle, pact animalization, and augmentation in the rate of recurrence of contracts, incessant evaluations, and imitative markets. Antagonists argue that neo-liberalism is the functioning of comprehensive capitalism through military or government interference to guard the interests of multinational conglomerates, over and above this free trade also casts influences on wages and social structures. The Saudi Arabia's Securities Exchange Commission1 and the Saudi Arabia's Stock Exchange (Tadawul)2 established by the enactment of the Capital Markets Law with authority to regulate all aspects of the capital market. The Government of Saudi Arabia has been making significant attempts to strengthen its regulatory and institutional infrastructure for capital markets since 2003. The Government of Saudi Arabia prepared and issued the Capital Market Law, which was concretizing in 2003, through the creation of the Supreme Economic Council and the Saudi Arabian General Investment Authority. These reforms should help galvanize the Saudi Capital market.3 The major objective of this study is to identify the prospect and challenges of the rules and regulations of the Saudi Arabia capital market. The Government of Saudi Arabia has been making significant attempts to strengthen its regulatory and institutional infrastructure for capital markets since 2003. The Government of Saudi Arabia prepared and issued the Capital Market Law, which was concretizing in 2003, through the creation of the Supreme Economic Council and the Saudi Arabian General Investment Authority. These reforms should help galvanize the Saudi Capital market. 3 Objectives of the Study The major objective of this study is to identify the prospect and challenges of the rules and regulations of the Saudi Arabia capital market. In order to reach this objective, the sub-objectives include: 1. An overview of the Capital Market Law of 2003; 2. An assessment of the contemporary equity market in the country; 3. To conduct a survey of the overall institutional, legal and regulatory framework for capital markets. Problem Statement Due to the number of banking and financial crises in the global capital markets, companies have created series of techniques in order to improve the market performance.4 The capital market of Saudi is not well diversified with such techniques as there exists a specialised securities regulator and the Saudi Arabian Monetary Authority (SAMA) that regulate the market and in this way restrict companies from many lucrative activities.5 Before enacting the Capital Market Law and other Regulations of Saudi Arabia, the capital market lacked some of the basic features of more advanced markets such as a designated supervisory authority and a stock exchange with well defined functions.6 With booming oil revenues, government bond issuance is likely to diminish, causing a contraction in the supply of government debt.7 'There are no controls on portfolio investment in Saudi Arabian government securitiesas well as there are other major problems with the Sauid Arabia capital markets that I will disc uss in this dissertation. Since the enactment of the Capital Market Law of 2003, the Saudi Arabia Government has tried to promote reform programs in all sectors of capital market and these changes have been rapid. Among these measures has been the establishment of the modern Saudi capital market. The Saudi stock market is the largest in the region; and with the enactment of the Capital Market Law, the way is paved for a full-fledged securities market. There is a lack of transparency in the market, whether it relates to a company's expansion