The purpose of these Regulations is to set out the framework for short selling activities in respect of listed securities in the Kingdom.

a. Any reference to the "Capital Market Law" in these Regulations shall mean the Capital Market Law issued by Royal Decree No. M/30 dated 2/6/1424H.

b. Expressions and terms in these Regulations have the meaning which they bear in the Capital Market Law and in the Glossary of Defined Terms Used in the Exchange Rules, unless the contrary intention appears.

Any persons permitted to invest in the Market may enter into a short selling transactions as a seller in accordance with the relevant Implementing Regulations and the Exchange Rules.

a. Unless the Exchange specifies otherwise, a short selling transaction may be entered into in respect of all listed securities (except for Derivatives) in accordance with the following limits:

• 1) The short ratio to Average Daily Traded Volume of the relevant security (total net short positions / Average Daily Traded Volume of the last 60 days) must not exceed 10 days; and

• 2) The total net short positions must not exceed 10% of the free floated securities of the relevant security.

b. The Exchange will publish a daily report for total net short positions after the Trading Day including limits specified in paragraph (a) of this Article.

c. Listed securities breaching the limits specified in paragraph (a) of this Article are not permitted for short selling in the next trading day, Exchange Member is responsible for the verification of not selling the securities where any limit specified in paragraph (a) of this article is breached.

a. The Authority may prohibit or suspend short selling transactions in respect of a specific security, or may prohibit or suspend all short selling transactions in the Kingdom, at any time and as it deems fit, including but not limited to the following circumstances:

• 1) there are adverse events or developments which constitute a serious threat to financial stability or to market confidence;

• 2) for the protection of investors;

• 3) for the maintenance of an orderly market; or

• 4) where the aggregate sum of short positions in an eligible listed security across the market has reached a level where the Authority considers it necessary to exercise such powers.

b. The Exchange will publish on its website any action taken by the Authority pursuant to its powers under paragraph (a) of this Article.