The Saudi Arabian Capital Market Authority (CMA) announced on Monday that it has approved new regulations and procedures for market making proposed by the local Saudi Arabian Stock Exchange, aiming to fully tap the potential of the country's investment industry by improving its liquidity and trading volume.

The new regulatory framework, the Regulations of Market Making and Market Making Procedures, focuses on regulating securities market makers. The regulatory scope of this law covers activities related to buying and selling orders issued to ensure the liquidity of relevant stock market instruments at market opening.

CMA requires market makers to be members of the cash market or derivatives market, and they must separate their market making activities from other market behaviors.

The new regulations stipulate that "market makers must designate a custody center account (if applicable) and a CCP (central counterparty) account, which are limited to conducting market making activities on one or more specific securities in accordance with market making agreements

In addition, the regulatory agency has put forward more requirements for market makers, including the need for them to establish corporate accounts in securities depository centers and securities clearing companies, and all their activities must be strictly in accordance with local capital market laws.

Market makers play an important role in improving market liquidity, and more and more stock exchanges are adjusting their market maker related systems. As early as May this year, the Vienna Stock Exchange announced that it would innovate and adopt a new market maker model.