The Capital Market Authority announced a public consultation with traders and participants in the financial market through the "Istitlaa" platform regarding two new regulatory proposals aimed at strengthening transaction governance and increasing transparency in the Saudi market.

The first proposal seeks to regulate algorithmic trading by setting a maximum average of 20 orders for each executed trade per day for a security in the Main Market, excluding highly liquid stocks. It also requires market institutions to test their algorithms and retain their records before the scheduled implementation date of November 1, 2026.

The second proposal requires companies listed on the Main Market to hold earnings discussion calls twice a year within five business days of announcing their financial results and after the market closes. Companies must immediately publish the presentation and recording of the call for all investors. The regulation is scheduled to take effect with the announcement of the 2026 annual results.

In this context, Al Yamamah University students discussed the implications of these two proposals and their impact on the investment environment and the protection of market participants’ rights as follows:

Reducing the Space for Rumors and Building Foreign Investor Confidence

Student "Zikra Abdulkarim" @Zikra Abdulkareem explained her view, saying: "The proposed updates clearly improve market efficiency by regulating algorithmic trading and direct disclosure. Regular communication with investors reduces the space for rumors and misinterpretations, which positively enhances the confidence of local and foreign investors in the Saudi market."

Balancing Trading and Testing Brokerage Firms’ Readiness for Oversight

For her part, student "Rand Al-Khalaf" @Rand Alkhalaf outlined the regulation’s implications, saying: "The updates strike a balance by limiting volatility and reducing the information gap between companies and shareholders. However, the fundamental challenge lies in how prepared companies and brokers are for implementation; success depends on the quality of execution and oversight, not legislation alone."

Protecting Small-Cap Stocks and Bearing the Costs of Technical Infrastructure

Student "Fay Aldossari" @Fay Aldossari shared a comprehensive analysis, saying: "Capping algorithmic orders protects small- and mid-cap stocks from sharp volatility and artificial liquidity fragmentation, while the exception for highly liquid stocks provides the necessary flexibility. The most prominent challenges remain improving brokers’ technical capabilities to launch algorithm testing environments (Sandbox Testing), ensuring a level playing field and holding executive management accountable to foreign and institutional investors."

Completing Financial Statements and Strengthening Disclosure Regulation

Student "Halah Al Sheikh" @Halah Alalsheikh emphasized the importance of direct communication, saying: "Silent financial statements may not be enough to explain earnings volatility. This is where results meetings play a role by providing a deeper understanding of management’s direction and prevailing challenges, preventing people from following unofficial interpretations and making disclosure a regular institutional practice."

Addressing the Twin Pillars of Trading Efficiency and Data Quality

Student "Nouf Al-Alojayan" @Nouf Alojayan analyzed the impact of the regulations, saying: "These steps enhance the market’s appeal by addressing both trading efficiency and information quality. Clear and stable regulations, together with easy access to data, are fundamental pillars for institutional and foreign investors when assessing available opportunities."

Controlling Volatility and the Challenge of Technical Coordination

Student "Rahaf Al-Anazi" @Rahaf Alanazi shared her perspective, saying: "The core idea is to rein in sharp volatility through algorithms and clarify the financial trajectory through earnings discussion sessions. The real test remains how technically and operationally prepared brokerage firms are to absorb and apply the standards flexibly."

Balancing Automated Trading and Liquidity Flexibility

Student "Rabiah Almugait" @Rabiah Almugait added: "The updates support market efficiency and reduce ineffective orders. However, success in practice depends on applying these controls in a way that does not undermine trading flexibility and rapid liquidity in the markets."

Deepening Market Discipline Without Restricting Activity

Colleague "Lujain Al-Qurashi" @Lujain Algorashi highlighted the regulatory objective, saying: "The added value of the updates lies in building a more disciplined and transparent market without compromising its flexibility. Regulating algorithms protects trading, while disclosure places investors at the heart of management decisions."

Integrating Oversight and Disclosure to Build a Fair Environment

Student "Najd Faisal" @Najd Faisal pointed to the integrated dimension, saying: "Combining the reduction of automated trading volatility with opening a direct channel of communication with management would have a significant impact. It prevents misguided expectations and ensures that investment decisions are based on reliable facts."

Performance Incentives and Ongoing Management Accountability

Student "Al-Batoul Bedairi" @Albatool Bedairi said: "Direct communication holds management accountable for regularly explaining its plans and challenges, encouraging it to improve performance and capital governance, while also narrowing the information gap in favor of foreign investors."

Understanding Financial Drivers and Narrowing the Conceptual Gap

Student "Arwa Al-Huwaiti" @Arwa Alhuwaiti highlighted the financial dimension, saying: "Results meetings help break down the real drivers of performance, such as sales, profit margins, and debt. This enables analysts and investors to evaluate companies more realistically and accurately."

Limiting Artificial Liquidity and Exempting Blue-Chip Stocks

Student "Jumana Al-Shahri" @Jumana Alshehri explained: "Limiting order sizes curbs artificial liquidity and volatility while preserving the flexibility of blue-chip stocks by exempting them. The system’s success will continue to depend on brokerage firms’ testing of their systems and technical oversight."

Simplifying Investment Figures for All Market Participants

Student "Yazan Hamoud" @Yazan Hamoud emphasized the clarity of information, saying: "Not every investor is able to read detailed financial reports. Management’s direct explanation of the results answers questions and ensures fair access to information for everyone."

Moving Toward the Ranks of Advanced Global Markets

Student "Zaid Darweesh" @Zaid Darweesh pointed to regulatory maturity, saying: "These amendments bring the market in line with global practices by eliminating artificial liquidity. Although they impose temporary technical burdens on brokers, the greater challenge is the ability of traditional management teams to adapt to this level of public accountability."

Implementation Flexibility and Protecting Small-Cap Stocks

Student "Dina Alarjani" @Dina Alarjani drew attention to the liquidity aspect, saying: "Capping orders ensures trading stability, but small- and mid-cap stocks should be taken into account to ensure their liquidity is not affected, while allowing meetings to be recorded electronically to enhance flexibility."

Improving Liquidity Quality and Bearing Regulatory Burdens

Student "Fahad Al-Ruwaished" @Fahad Alruwaished highlighted the technical dimension, saying: "The 20-order cap improves the quality and stability of liquidity, even if it reduces its moment-to-moment speed. The technical costs that brokerage firms will bear to test systems before November 2026 are temporary burdens that will ultimately produce a more efficient and secure trading environment."


Mandatory Earnings Calls Empower All Investors and Enhance Transparency

Expert Abdulaziz Khrais believes that the new directive on mandatory earnings calls is a fundamental step toward implementing transparency, as it guarantees everyone’s right to participate in earnings discussions without exception.

Khrais explained that the previous practice was limited to funds and major investors, overlooking small investors and leaving the decision to organize such calls to companies’ discretion.

Under the new rules, all companies—whether large or small, profitable or loss-making—will be required to make calls available to the general investing public. This is consistent with established global practices. He noted that implementation will begin gradually with the announcement of fourth-quarter and annual results.

Integrating Oversight and Disclosure to Improve Pricing Efficiency and Deepen the Market

In an analytical reading, financial and economic analyst "Hamad Al-Saeed" @Hamad Alsaeed added: The Capital Market Authority’s latest consultations address two complementary aspects of market efficiency: order quality and equitable access to information.

Regarding algorithmic trading, the cap of 20 orders per executed trade targets orders that enter the order book and are then canceled without execution. It is worth noting that the restriction does not cover highly liquid stocks, which account for approximately 97% of the weight of the Tadawul All Share Index (TASI). This means the restriction will effectively apply to around 108 of the 270 stocks, whose combined weight does not exceed 3.5% of the index.

As for earnings discussion calls, holding them regularly enhances disclosure transparency, as the figures are accompanied by management’s explanations and expectations. Periodically addressing analysts’ questions also encourages companies to improve their operating performance. This gives investors a clearer basis for their decisions and enhances the market’s appeal to both local and foreign investors.

Together, the two proposals are expected to improve pricing quality and deepen the market, in line with the objectives of the Financial Sector Development Program.