CMA organizes
dealings in derivatives

Strict rules to financial intermediaries and correspondents

The Capital Markets Authority (CMA) has issued a decision that clarifies definitions and rules about the system of transactions in financial derivatives.

Financial tools and derivatives are defined as any tools and financial products (stocks available for the public or financial contracts and tools, whose value is related to real or financial assets or indexes), programs, securities, Sukuk, contracts, derivatives, certificates, or compound financial instruments (stocks, shares, certificates of deposits, debts, trading securities, government bonds, and debt securities, among others).

The decision defines the financial intermediary as the local brokerage companies, financial institutions, and banks dealing in financial tools. It also defines the correspondent as the non-resident party that conducts transactions related to financial tools and products, or off-exchange retail forex abroad, on behalf of the financial intermediary or its clients.

The decision modifies a previous one issued in February 2014, which organized the financial markets and protected investors. The terms in the first decision “were very technical,” according to the legal department at the CMA.

The new decision sets restrictions on the financial intermediary about transactions in financial products and derivatives conducted with any correspondent on its own behalf or that of its clients.

Other terms are stated in the decision about rules between the financial intermediary and clients, specifications of margins, as well as about rules of transactions through an electronic platform.