Dear guests,

In the name of of Allah the Merciful

Praise be to God, Lord of the Worlds, and blessings and peace be upon our Prophet Muhammad and all his family and companions.

Peace, mercy and blessings of God,

                At the outset, I am pleased to thank you all for attending this ceremony, which represents a milestone in the development of the financial sector in the Kingdom, with the inauguration of the National Center for Registration of Financial Derivatives, which is under the supervision of SAMA, and which is concerned with preserving the data of unlisted financial derivative contracts. Thanks are also due to the colleagues from SAMA, the Saudi Credit Bureau (SIMAH) and the banks who contributed to this achievement, as well as the colleagues who worked on preparing and organizing this ceremony well.

                About a decade ago, financial derivative markets not listed in central platforms contributed to the global financial crisis in 2008, through the turnout of many clients, given that the contracts were bilateral between the client and the financial institution, and they were flexible in their terms, provisions and structures. . Upon the occurrence of the financial crisis, there was great concern about the credit risk of counterparties to financial institutions, and the ability of market participants - most of whom were banks - to gain adequate knowledge of activities and positions in the market, weakening their ability to better assess the potential risks of their operations, and then take Appropriate measures to manage them in a manner that contributes to the health of the financial system. In the wake of the global financial crisis and as a result of it, the level of transparency has improved; Reducing credit risk for counterparties to financial institutions in non-centralized derivative contracts is one of the main axes in supporting the establishment of a solid financial market structure. In 2009, the Group of Twenty in Pittsburgh adopted an approach that "all standardized contracts for financial derivatives that are not listed on platforms on trading markets or in electronic trading platforms must be traded, as appropriate, and they must be cleared from central clearing centers." It also stipulated that "Trading data storage centers must be informed of all OTC derivative contracts."

                SAMA has introduced a new licensing system that requires centers to store trading data to meet the governance and operating standards recommended by the Payments and Financial Market Infrastructure Committee (CPMI) and the International Organization of Securities Commissions (IOSCO), including standards related to governance, market transparency, data availability, operational reliability, access and sharing, data protection, record keeping, communication procedures and standards. Based on the completion of the Saudi Credit Information Company (SIMAH) the requirements of the operating regulations for trading data preservation centers set by SAMA, SIMAH obtained a license to establish and operate the first national center for registering financial derivatives, the center that we celebrate today.

                Although the financial markets in the Kingdom are relatively small in terms of the number of products, complexity and the diversity of dealers in them, SAMA's constant interest is to enhance the transparency of financial derivative markets that are not listed in centralized platforms. We are certain of the merits of creating an adequately regulated market for trading these derivatives. On the other hand, we also realize the need to achieve the right balance in the organization, as the size of the Kingdom's markets and its promising future provides us with a favorable opportunity to develop and shape them on a sound basis, despite the presence of some challenges.

                The purpose of derivatives is to provide risk management tools that play an important role in the stability of financial markets. If we impose very burdensome requirements, the derivatives may become very expensive, so we chose to start with the most popular products, such as interest rate derivatives and foreign exchange derivatives, which constitute more than 90 percent of the derivatives in circulation. In the near future, we will apply the reporting requirements to other less-traded products, such as: equity derivatives, credit derivatives, and commodity derivatives.

                As for the financial market infrastructure (such as: trading data preservation centers, central clearing centers for securities, online trading platforms, etc.) there is a lot of scope for their development, and this means that SAMA and other local regulators must work with other government entities to develop systems competence.

                At the global level, there are naturally differences between countries. While the market for OTC derivatives is global in nature. Each country sets its regulations according to its local needs. This led to complications for entities and transactions related to more than one system. Nevertheless, we recognize the need to standardize global standards, and we believe that the framework for trading data storage centers in the Kingdom has sufficient flexibility to enable it to comply with relevant international standards and practices.

Dear Brothers and Sisters,

            In conclusion, I am pleased to point out that the Kingdom is among the first countries to fulfill the commitments of the Group of Twenty related to reporting financial derivatives outside the stock market. On this occasion, I am pleased to present to all colleagues participating in the work teams from SAMA, SIMAH, and market dealers from banks, on this important achievement of the financial sector.

Thank you all for attending today.