PDF Saudi Capital Market Rules and Regulations - Brokers

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Untrue Statements

Rumours

1• sell or make offers to sell a security or securities at lower prices or in a pattern of successively lower prices, or.

Learning Objective

Untrue Statements

The Market Conduct Regulations prohibit persons from making false statements of material fact, either orally or in writing, where the purpose of the statement is to influence the price of the security in order to induce another person to enter into a transaction, or to refrain from exercising rights under a security. Given this risk, the Market Conduct Regulations specifically prohibit a person from circulating (whether directly or indirectly) untrue statements of fact or an opinion solely for the purpose of influencing the price or value of a security or securities, which also includes any other manipulative purpose. The Market Conduct Regulations set out the specific circumstances in which a person would be deemed to have made a false statement.

Note that, in this context, a material fact is any information relating to a security which, if known to the investor, would have materially affected the price or value at which the investor bought or sold the security.

Responsibility for Making Statements

Insider Trading

Inside Information
Interaction between Market Manipulation and Insider Trading
Scope of Insider Trading Regulations
Directly Trading
Indirectly Trading
Insiders
Disclosure of Inside Information
Inside Information and Trading

Abuse of the financial markets can take many forms and can be categorized in different ways. Market manipulation involves the use of trading techniques that will give other market participants a false impression of the supply, demand or value of a security. This includes, for example, trading that results in no change in the ultimate ownership of the security (perhaps by trading through separate accounts ultimately owned by the same individual).

Here it can be determined that a person has violated the provisions of the Capital Markets Act or the Market Conduct Regulation regarding market manipulation, insider trading or untruthful statements while acting on behalf of another person; that other person would also be liable and subject to the same sanctions as the person performing the relevant acts. A person who has or has obtained certain information about a security or securities which, if such information were made public, would have a material effect on the share price of the underlying security or securities, is prohibited from entering into information (including placing an order) any transaction – therefore they are prohibited from engaging in insider trading.

End of Chapter Questions

Capital Market

Institutions’ Conduct

Market Manipulation
Insider Trading
Handling Client Orders

Client Order Handling
Timely Execution
Execution
Allocation
Churning
Aggregation of Client Orders
Dealing Ahead of Research and Investment Recommendations
Prohibition

Conduct of Business

Gifts and Inducements
Confidentiality

A Capital Market Institution must execute customer orders for a security before executing any order in the same value for any of its accounts. When dealing with, or for, a client, a Capital Market Institution has a duty to provide the client with best execution. Otherwise, the Capital Market Institution must act as an agent and obtain the best price in the prevailing market at that time.

Upon receipt of a customer order and successful execution, the Capital Markets Institute must ensure that the transaction is immediately allocated to the underlying customer's account. Therefore, a capital market institution should take into account a client's agreed investment strategy when determining the frequency of transactions. Capital market institutions may therefore not advise or encourage a client to trade if the trade would be considered to be contrary to the client's best interests.

Likewise, where the capital market institution has discretion over a client account, they must not abuse that discretion by excessive trading to generate commissions and fees - which would be contrary to acting in the best interests of the client. Therefore, the clients' individual circumstances must be taken into account when making an assessment to determine whether the capital market institution has acted in the clients' best interests and managed their conflicts of interest. In addition, a capital market institution must not participate in or offer to participate in any losses of a customer.

Disclosure by a Capital Market Institution is reasonably necessary for them to perform or undertake a particular service for a client. To the best of its knowledge and understanding, Capital Market believes that the information is no longer confidential. What circumstances may a capital market institution deal with before any future research it publishes.

Is a capital market institution allowed to undertake own account transactions contrary to a recommendation it has sent to clients. What restrictions apply when a capital market institution is about to send a recommendation to a number of clients.

Glossary

In relation to a limited company, it includes a member of the board of directors and in relation to any other company, it includes any manager or other senior employee who makes and implements the company's strategic decisions. Any regulations, rules, instructions, procedures and orders issued by the Authority relating to the implementation of the Capital Markets Act. Or any other similar term, wherever it occurs, in relation to a notice, notification, approval, agreement or other document, means in legible form and capable of being reproduced on paper, regardless of the medium used.

In relation to any type of securities, means securities accepted for listing on the Stock Exchange. The order will include any decision by a capital market institution to execute a transaction in the exercise of discretion for a client, an investment fund that it manages or for the purpose of aggregating orders for its clients in accordance with the Conduct Rules. The market. With respect to a security, includes the sale of the security for consideration, the delivery, assignment or conversion of rights under a security or the assumption of a related liability.

Multiple Choice Questions

The Capital Markets Institute knows that the natural person is employed by the security. The Capital Markets Institute must register this decision and provide detailed information to the Supervisory Authority within 24 hours. The Capital Markets Institute has offered to participate in any losses with client C.

Acting in the best interest of the client does not apply when the capital market institution operates on a principal basis. A capital market institution that deals with a client's portfolio, when it has discretion, more than once a week. A client has just instructed a capital market institution to purchase some shares, which of the following is correct.

The capital market institution may delay the allocation to the client's account until the close of the stock market. After execution, the Capital Market institution must immediately allocate the transaction to the customer's account. A capital market institution may not combine a customer's order with the same order of another customer.

Two clients both instructed a Capital Market Institution to execute a transaction in the same shares. Place an order with his broker to buy shares in Capital Market Institution B at a specific target price. Which of the following is correct regarding the gift and inducement rules for a capital market institution.

Answer References

C Chapter 1, Section 3.2
A Chapter 1, Section 3.3
B Chapter 1, Section 5
D Chapter 1, Section 4.5
B Chapter 1, Section 2
A Chapter 2, Section 1
B Chapter 2, Section 3.5
D Chapter 1, Section 1
C Chapter 2, Section 1

Option B is correct because the term compounding refers to excessive trading for the purpose of generating commission for a capital market institution. However, there is no right or wrong number of transactions that will determine whether a capital market institution funds a client's account, as this depends on the individual client's investment goals, financial situation and account size. Option C is correct because the capital market institution must assign the customer an order that is executed at its discretion when it is executed immediately and without delay.

Option C is correct because, in order for there not to be a breach of the conduct rule, a capital market institution may not execute a transaction until the clients receiving the survey have had sufficient time and opportunity to read the survey and make decisions based on its content and recommendations. Option D is correct, there are limited circumstances in which aggregation of a customer order is permitted where the underlying security is listed on the Exchange. The Market Conduct Regulations prohibit any person (recognised under the laws of the Kingdom) from engaging in or participating in any manipulation or deceptive act in connection with a transaction (including an order) in a listed security listed on a stock exchange in the Kingdom where they knew (or had reasonable cause to have known) the nature of their act or practice.

If a capital market institution decides not to accept or execute a client's order, it must document this and include all relevant information that enabled it to reach that conclusion. Option B is correct because capital market institutions are not permitted to induce a client to participate in any transaction by offering or giving gifts or inducements, or accepting gifts or inducements, if doing so would conflict materially with any duty owed to the client. In addition, the capital market institution may not offer to participate in the client's potential losses.

When a Capital Market Institution receives an order from a client, and accepts that order, it must execute that order as soon as practicable in the circumstances prevailing in the market. The range of financial instruments covered by the insider trading regulations in the Kingdom are all traded securities, which include any security whose price or value would be materially affected if the information were disclosed or made publicly available. In this context, trading refers directly to either the execution of a trade in the security or an offer to buy or sell the security on an exchange in their own name or for an account in which they have an interest.

Syllabus Learning Map

Prohibition of Manipulative and Deceptive Acts or Practices On completion the candidate should

Know the regulations governing the prohibition of manipulative and misleading acts or practices (Market Conduct Regulations Part 2, Article 2).

Manipulative and Deceptive Acts or Practices On completion the candidate should

Capital Market Institutions’ Conduct Chapter 2 2.1 Market Manipulation

Insider Trading
Handling Client Orders

Examination Specification