The CMA Deputy of Market Institutions, Bander Sulaiman Alayed, reported that the capital market institutions authorized by the Capital Market Authority (“CMA") achieved a net income of SAR 6.1 billion with a 29.8% increase by the end of 2022 (Highest in history), compared to SAR 4.7 billion in 2021. Such a leap was achieved at the time when the CMA was continuing its comprehensive development plan in full cooperation with the capital market system.
The CMA is laying down the bases and rules regulating the market institutions to ensure investors' protection and that the institutions are fully bearing their liabilities. The above is a clear indication of the effective role the capital market institutions play in the Saudi financial sector, which the Kingdom pose great importance within the framework of the Kingdom's Vision 2030, Alayed explained.
The capital market institutions profits boomed due to the rise of revenues to 26% in 2022, reaching more than SAR 12 billion (Highest record in the capital market institutions' history), compared to 2021. Asset management revenues represented the biggest ratio of the capital market institutions' aggregate revenues at 33.64%, followed by dealing activity at 19.67%, investment at 16.45%, and investment banking at 9.71%. The remaining ratios were divided among other revenues, advice, and custody, Alayed reported.
The CMA Deputy of Market Institutions explained that the number of portfolios managed by the capital market institutions hit a record, reaching 37,021 portfolios by the end of 2022 (Highest record in the capital market institutions' history) with an increase of about 1204% compared to the end of 2021 (2839 portfolios). The said high record is due to the increased portfolios of one of the capital market institutions that launched its business recently.
In addition, Alayed reported that Local shares category acquired the biggest stake of asset values managed by the authorized capital market institutions in the Discretionary Portfolio Management (DPM) at 45.61% with SAR 120.97 billion by the end of 2022, followed by the investment funds category at 23.48%. The stake in international shares, debt instruments, and other investment categories reached 30.91%.
Regarding the CMA's role in regulating capital market institutions, Alayed stated that the CMA established the Capital Market Institutions Regulations to govern the legal form of the institutions. In which case, CMA stipulated that in order to engage in security business, applicant must be established in the Kingdom. Also, to engage in dealing, custody, and managing business, the applicant must be a subsidiary of a local bank; a joint stock company; a subsidiary of a Saudi joint stock company that is engaged in financial services business; or a subsidiary of a foreign financial institution that is licensed under the Banking Control Law.
The applicant may be established in the Kingdom by any legal form to apply for a license to conduct arranging or advising in securities business. The paid up capital of the applicant must not be less than SAR 50 million to have a license for conducting dealing and custody business, and SAR 20 million for managing investments and operating funds; and a capital that covers the expected expenses for a year for managing investments, Alayed concluded.