Saudi Arabia: CMA Proposes Expanding Public Fund Investments

Saudi Arabia: CMA Proposes Expanding Public Fund Investments News developments

Saudi Arabia: CMA Proposes Expanding Public Fund Investments

Al-Watan, 12 June 2024: The Saudi Capital Market Authority has invited public comments from interested parties, market participants, and stakeholders on the proposed amendments to the Investment Funds Regulations, allowing a 30-calendar day consultation period ending 12 July 2024.

The project aims to allow public funds to subscribe to debt instruments offered through private placements if issued by issuers within the Kingdom, in order to enable the growth of the asset management industry.

Under this project, a public fund manager will be able to subscribe with a larger number of debt instrument issuers, after removing the conditions imposed on them according to the Investment Funds Regulations.

This development is expected to increase the attractiveness of the market for debt instrument issuers, as well as the appeal of funds investing in debt instruments as a result of the expanded range of assets available for them to invest in.

To enhance investor protection, the proposed project has required money market fund managers and capital protected funds to not invest more than 10% of the fund’s net asset value in debt instruments issued by a single issuer, in order to limit risks and increase portfolio diversification.

According to the proposed project, managers of public funds that invest in debt instruments are obligated to disclose the credit rating of the invested debt instruments in the fund’s quarterly statement, in order to enhance disclosure and transparency levels for investors in those funds.

The proposed amendments align with the Capital Market Authority’s strategy to deepen the debt market, increase liquidity, boost the Saudi market’s global competitiveness, and develop the sukuk and debt instruments into a top emerging market.

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Tanya Jain