Regulatory Alerts2018-07-18
Added · Updated
Instructions for Dealing in Major Foreign Currencies and Precious Metals on a Margin Basis for Clients No. 16/2018
These instructions, effective immediately, apply to banks operating within the Kingdom and repeal previous instructions No. 31/2006. Banks are prohibited from granting credit facilities to clients for margin financing and must obtain an initial margin of no less than 15% of open positions in major foreign currencies and precious metals. If the margin ratio falls below 10% and up to 5%, clients must increase it to 15% within two business days, and if it falls below 5%, positions must be partially or fully liquidated immediately. Banks are also required to establish detailed policies, automated monitoring systems, independent back and middle offices, and comprehensive legal agreements with clients.
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