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CMA seeks feedback on public listing of financing investment funds: The Capital Market Authority (CMA) has put forth a proposal to allow financing investment funds — which provide loans directly or indirectly — to be publicly offered and listed on Tadawul’s main and parallel markets, it said in a statement. The proposal would, if approved, expand these funds beyond their current private-placement-only structure. Public consultation on the proposed changes will run for 30 days through to Sunday, 10 September on Istitlaa.
Why it matters: The regulator said the move is part of a broader effort to diversify investment products, boost the asset management industry and create new financing channels to support economic growth. Financing investment funds provide continuous cashflows and a mix of risk-return profiles, making them attractive to portfolio investors.
Key changes in the draft: Under the draft rules (pdf), public financing funds would face new risk controls, including a 25% cap on exposure to any single borrower or related group, borrowing limits (15% of net asset value for public funds, 50% for parallel market funds), and restrictions on investing in highly volatile or illiquid assets. Indirect lending must be carried out via portfolios from Saudi Central Bank-supervised entities or licensed financing companies.
Simplifying the rulebook: The CMA also wants to consolidate all rules for these funds into a single regulatory document to simplify compliance, increase clarity, and strengthen investor protection. The updated framework also formalizes definitions for “direct” and “indirect” financing funds, adds risk management requirements, and mandates more frequent disclosure of fund performance and borrower exposure.
The bigger picture: By the end of last year, Saudi private financing funds held around SAR 2.8 bn in assets under management. If approved, the changes could pave the way for larger, more diversified funds with lower overall risk, while giving public investors access to an asset class that has so far been restricted to private placements.
IN CONTEXT- The Kingdom is also pressing ahead with market reforms aimed at making it easier for foreign investors to trade its stocks. The Capital Market Authority (CMA) told Bloomberg that opening the market further to GCC residents was a “natural next step,” while Tadawul said it expects the approval process for new Saudi depositary receipts to mirror timelines for IPOs and dual listings.
