Saudi Arabia’s capital markets may be entering a new phase of reform. In his first media interview since being appointed Chairman of the Saudi Capital Market Authority, H.E. Mazen Al-Sudairi laid out a broad agenda centered on fairness, market confidence, IPO quality, liquidity and investor participation.
Speaking with Al Arabiya Business News, Al-Sudairi addressed several of the main challenges facing the Saudi market, including weak performance across a large number of stocks, concerns around some recent IPOs, lower retail participation in parts of the market, weak liquidity in certain securities, and questions around algorithmic trading and short selling. He also said the CMA has prepared an execution plan to begin introducing reforms within 90 days.
A Market Focused on Confidence and Fairness
The broader policy direction appears focused on improving market quality and confidence. Al-Sudairi said the guidance given to him was to create fairness in the market and work to address its challenges. He stressed that the CMA does not see itself as a guardian over investors, but as a regulator responsible for protecting market participants and preserving market integrity.
The longer-term objective is to make the Saudi equity market a better reflection of the domestic economy, a credible platform for companies to raise capital, and a meaningful savings venue for Saudi citizens. Confidence sits at the center of that objective, and many of the proposed reforms appear designed to improve trust in the market and its institutions.
IPOs Under the Microscope
One of the clearest areas of focus is the IPO market. Al-Sudairi said post-listing share performance should be considered an important measure of whether an IPO has been successful. He also questioned the usefulness of relying too heavily on subscription multiples, noting that large order books do not always reflect genuine underlying demand.
The CMA is looking at the responsibilities of the different parties involved in the offering process and appears prepared to adjust requirements where necessary. The aim is to improve IPO quality, pricing discipline and post-listing outcomes, while restoring confidence in the issuance process. Al-Sudairi also said the CMA has investigated a number of previous IPOs.
Retail Investors Back in Focus
Retail participation is another major priority. Al-Sudairi said that, in principle, retail investors should receive 30% of IPO allocations. This fits with the broader objective of positioning the Saudi market as a long-term savings and investment channel for citizens, alongside institutional and foreign participation.
The regulator is also examining foreign ownership limits in coordination with government institutions and sector regulators. Al-Sudairi reiterated the CMA’s goal of increasing participation across all investor groups, including international investors. Foreign capital remains an important component of Saudi Arabia’s market development as the Kingdom continues to deepen its integration with global capital markets.
Algo Trading Faces New Controls
Algorithmic trading was another significant theme in the interview. Al-Sudairi acknowledged that algorithms are part of the technological development of financial markets, but said that technology should not undermine fairness. In securities with weaker liquidity, algorithmic activity can contribute to larger price swings and higher short-term volatility. He also noted that much of the algorithmic trading activity in the Saudi market is conducted by foreign financial institutions.
The CMA’s approach appears to be focused on setting appropriate limits and controls rather than restricting technological development. The issue is particularly relevant as Saudi Arabia continues to modernize its trading infrastructure and attract more sophisticated institutional participants.
Short Selling Enters a Tighter Review
Short selling is being reviewed through a similar lens. Al-Sudairi said short selling can be beneficial for the market, while acknowledging that it may currently be having some negative effects. The CMA has already moved forward with the securities lending component of the framework and is working on additional controls around short selling.
Securities lending and short selling are important tools for modern capital markets. They can support liquidity, price discovery, hedging and market-making activity. The regulatory challenge is to ensure that these mechanisms contribute to market efficiency without creating distortions or weakening investor confidence.
Liquidity and Disclosure Move Higher on the Agenda
Liquidity was a recurring theme throughout the interview. Al-Sudairi said protecting local liquidity depends on competitiveness and trust. He also stressed that the CMA wants to be viewed as a source of confidence for market participants rather than a source of fear.
Governance and disclosure are also receiving greater attention. The CMA is working to strengthen the effectiveness of shareholder general assemblies and improve communication between listed companies and investors. Listed companies are now required to hold two public earnings discussions each year on their financial results, with access for both retail and institutional investors.
Improved disclosure and shareholder engagement should help reduce information gaps and strengthen accountability. The Chairman also said the CMA does not intend to set specific limits on board remuneration. The focus instead is on improving board effectiveness, management quality and overall company direction. This comes following the CMAs approval of an updated ETF framework for Saudi Arabia.
No Retreat from Global Investing
On international investing, Al-Sudairi said the CMA has not sought to restrict investors from accessing overseas markets. The regulator’s role remains investor protection rather than determining where investors should allocate capital. The same basic principles applied to investor protection domestically also apply to international market activity.
A 90-Day Reform Window
Several regulatory initiatives are already moving through the consultation process. These include proposals covering IPO practices, restrictions on algorithmic trading, rules governing dealing in financial markets outside the Kingdom, and provisions related to earnings discussion meetings.
The overall message from the interview is that the Saudi CMA is moving into a more active reform phase. The priorities are clear: improve IPO quality, restore confidence, increase retail participation, strengthen oversight of algorithmic trading and short selling, improve governance and disclosure, and maintain the market’s attractiveness to foreign capital.
For investors and financial institutions, the areas to watch most closely are IPO pricing and allocation, retail participation, algorithmic-trading controls, securities lending and short-selling rules, and foreign ownership limits. Changes in these areas could have important implications for issuers, brokers, asset managers, market makers and investors.
Saudi Arabia has already built one of the most important capital markets in the region. The next phase appears focused on improving how efficiently, fairly and credibly that market functions.
