Legal regulation of the Saudi stock market : evaluation, and prospects for reforms
The aim of this thesis is to explore which laws and institutions are essential for a strong, well-developed and efficient securities market in Saudi Arabia. In connection with understanding the significance of the subject matter, this dissertation seeks to explore the development of the modern securities market, assess the recent efforts to create new rules and institutions that could modernise the market, and offer suggestions for reforms that could stimulate further market development. This addresses the issues of coherence in regulatory and supervisory rules and norms at national level. The Saudi market is not as competitive as other regional markets. It is a bank-dominated system in which several large institutions exert significant influence on the pattern and structure of market activities. The absence of non-bank intermediaries within the financial system has meant that the Saudi market is structurally less well developed. Indeed, the lack of competition in the market, due to the absence of market makers, has led to acute problems in the area of finance, where the lack of competition in the market has resulted in higher prices and a lower level of liquidity. At the same time, there are serious regulatory problems associated with a bank-dominated system. Recent work on these markets has shown that they are characterised by insufficient transparency, wide bid-ask spreads insider self-dealing and market manipulation. This thesis examines the transformations taking place in the regulation of the Saudi stock market and considers them against the backdrop of increased competition from other national exchanges in the Gulf region. This work also investigates the pressure to remove protectionism regulation put on the national supervisor by large investors seeking more accurate and timely information and the limitation of insider trading by structural insiders. This thesis will seek to show that the introduction of regulatory reforms could yield significant benefits for investors. The prospect of greater transparency and public disclosure of information about companies could enhance the relative liquidity of the Saudi Arabian exchange and lower the cost of transactions.