Saudi Arabia: The Introduction Of A New Law Regulating Dealings With Foreign Stock Exchanges

Last Updated: 20 March 2018
Article by Dana Abduljaleel and Omar Habaybeh


The aftershocks of the global financial crisis of 2007 deeply affected Jordan's stock market exposing a number of sham transactions in relation to, among other things dealings in foreign stock exchanges. Fast-forward ten years in time and the Jordanian government has issued Law No.1 Regulating Dealings With Foreign Stock Exchanges Law no.1 of 2017 (the "Foreign Exchange Law") to replace Temporary Law No.50 Regulating Dealings With Foreign Stock Exchanges of the year 2008 with the hopes of providing a more tight knit protection scheme for investors to prevent any fraudulent dealings through limiting the scope of entities capable of dealing in foreign stock exchanges.

By virtue of the new Foreign Exchange Law restrictions have been introduced for the first time limiting the entities who are able to broker or mediate on behalf of third parties in foreign stock exchanges to only banks and financial service companies licensed by the Securities Commission.

The below articles outline the major additions introduced by the Foreign Exchange Law and the possible impact the said legislation may have on the ability of foreign banks to operate under the new legislation.

Unprecedented Limitations

Article 3 of the Foreign Exchange Law explicitly states that the practice of dealing in foreign stock exchanges or mediating on behalf third parties in foreign stock exchange, is solely limited to banks and financial services companies licensed by the Jordan Securities Commission. With the exclusion of the banks and/or the licensed financial service companies Article 3 prohibits any entity from partaking or mediating in foreign stock markets whether it be on behalf of another party or on behalf of itself directly or indirectly.

Furthermore, no person is allowed to promote or advertise by any means any mediation services on behalf of third parties in foreign stock markets or to mediate in foreign stock exchange directly or indirectly. Such limitations have been placed to ensure the protection of investors from false advertisement of foreign stock market dealings that had led to the 2007 financial scam.

It is also worth noting that in contrast to the previous Foreign Stock Exchanges Law of 2008, the newly issued Foreign Exchange Law does not expressly exempt foreign banks from the restrictions set out in Article 3 above. Under the previous regime foreign banks could be exempt from such restrictions by the Securities Commission and if approved by the Council of Ministers.


Article 4 outlines more strict penalties for breaching Article 3(B) and 3(C) of the Foreign Exchange Law and imposes a fine of no less than one thousand (1,000) Jordanian Dinars and no more than one hundred thousand (100,000) Jordanian Dinars, along with one year imprisonment. Such firm penalties enforce the ideal the government is trying to portray of having more regulated dealings in the foreign stock exchange market.

Moreover, any contract or agreement entered into by any party that accordingly infringes Article 3 is considered to be in breach and thus, the infringer must return all the money collected from the contracted party and gained as a result of such breach.

If the party in breach is a company, then its chief executive officer, board of directors or its general manager (if applicable) are considered to be responsible and jointly and severally liable with the company. As such they must return all the money gained as a result of the money received from others.

A Clearer Image

Article 5 dictates that whenever appropriate, the Management Board of the Jordanian Central Bank as well as the Board of Commissioners of the Securities Commission must issue further instructions and decisions necessary to implement the provisions of this law.

Additionally, the Council of Ministers are expected to issue the regulations necessary to implement the provisions of this law.

Such articles are likely to provide further clarity as to the interpretation of the restrictions placed under the Foreign Exchange Law with respect to foreign dealings and exemptions for foreign banks from such restrictions.


It is evident that the new Foreign Exchange Law does not take into consideration many factors that should be encompassed in its articles. Such factors consist of for example, foreign banks and the repercussions that might be incurred as a result of restricting such entities.

Furthermore, it does not take into account the fact that, despite having a licensing mechanism for the eligible entities in Jordan, such authorisation is not automatically translated into foreign markets where some banks or companies licenses may not be recognised by other jurisdictions as being sufficient to give them the authorisation to be able to participate in other foreign stock exchanges and thus, they might need the mediation of other foreign banks or qualified intermediaries to be able to deal in foreign stock exchange. With the New Foreign Exchange Law being silent on such a matter it is not clear whether such acts might be in breach of the New Foreign Exchange Law.

What is more, the new Foreign Exchange Law is also silent regarding the ability of any investor to simply use websites or applications to trade online in foreign stock markets without the need to have a qualified mediator or an approval from the government.

Despite the fact that the new Foreign Exchange Law does not yet clearly portray the full image the government is trying to paint with this new legislation, it definitely takes a step into the right direction taking into consideration the previous blunders caused by loose restrictions and lenient penalties. It is evident that with its new more strict approach in regulating the dealings, it would be providing more sufficient protection for simple and small time investors who lack the adequate experience to detect any fraudulent acts.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions