Saudi Arabia

Saudi Arabia supervises its capital market through the Capital Market Authority and its banking system through the central bank, SAMA. The domestic framework licenses brokerage in listed securities; it does not license retail leveraged CFD brokers.

The peg

The Saudi riyal has been fixed to the US dollar since 1986 at an unchanged rate, one of the longest-standing pegs in the world. It is sustained by oil revenues denominated in dollars and by very large foreign reserves, and it has survived oil price collapses that would have broken most fixed rates.

For a trader the consequences are specific. The riyal is not a tradeable currency in any practical sense — forward pricing occasionally shows stress during oil downturns, and speculators have periodically bet against the peg, without success. And because Saudi Arabia imports US monetary policy through the peg, its interest rates follow the Federal Reserve regardless of domestic conditions, which is the standard cost of a fixed rate.

The wider lesson is one this site repeats: a peg holds on reserves and political commitment, and the Gulf pegs have both to an unusual degree.

Retail trading

Residents who trade CFDs use foreign brokers, so the licensing jurisdiction's rules and compensation arrangements apply entirely, and the CMA has no jurisdiction over a foreign firm. The CMA publishes warnings about unlicensed entities offering securities services, and these are worth reading — the Gulf is heavily targeted.

Islamic accounts

Swap-free accounts avoiding overnight interest are standard for the region. Two things are worth verifying: whether the account is genuinely swap-free or merely defers charges, and how the broker recovers the revenue — a stated administration fee is transparent, a widened spread is not, and some brokers restrict swap-free status after a period.

Cautions

Investment schemes promising guaranteed returns, often framed in religious terms to establish trust, recur across the Gulf. A guaranteed percentage is not a trading result, whatever language surrounds it.

Checks

Verify a broker on its own regulator's register, and read the CMA's warning list.