The Development of the Stock Exchanges in Saudi Arabia, Kuwait and Qatar from a Legal Perspective

Abstract

Objective: The objective of the article is to trace the historical development of laws relating to trading in securities in countries whose legal system is based on Shariah law and Islamic law principles.  Countries such as Saudi Arabia, Kuwait and Qatar base their legal systems on Shariah law but have had to develop their financial markets and stock exchanges in a way that attracts foreign investors and stimulates economic growth. This article sets out how the various legal systems have developed in response to differing circumstances in each country.   Method: The authors used a study-analysis method in preparing this article. The article is styled as a historical research paper based on the extensive research and expert opinion of the authors. For the theoretical framework the authors used a comparative legal analysis of the laws enacted by different countries to highlight the different approaches taken in response to financial scandals and abuses. It will show that despite having a common legal framework based on Shariah law, each country has developed at its own pace and in response to its own circumstances.   Result: The article highlights the different approaches taken by different countries when enacting laws regulating financial markets and stock exchanges, even though they are based on Shariah law and Islamic legal principles. The article highlights the value of Islamic Law in some instances but also shows that there is no one-size-fits-all approach that can be taken. This article addresses the problems associated with a lack of regulation of financial markets and rapid growth in economic activity in the GCC countries, and how lawmakers have responded to these challenges.   Conclusion: The article is unique in its study of various modern laws enacted by countries that apply Sharia law. This article sets out how legal systems based on Shariah law can still develop efficient financial markets and stock exchanges but highlights how the lack of regulation can lead to abuse and financial scandals.