CMA OKs issuing debt instruments on crowdfunding platforms via licensed institutions

Logo of Capital Market Authority (CMA)

The Capital Market Authority's (CMA) board of directors approved the regulatory framework enabling capital market institutions licensed for arranging activities to offer debt instruments on crowdfunding platforms.

This framework followed a trial phase that had taken place in Q2 2021. It is now among the activities that can be legally conducted by those carrying licenses to practice securities arranging business.

The market regulator also approved amendments to the Rules on the Offer of Securities and Continuing Obligations, the Rules for Special Purposes Entities, and the Capital Market Institutions Regulations, which came into effect as of their publication date, according to a statement.

The regulatory framework aims to increase the number of capital market institutions engaged in Fintech activities, as well as expanding the participation of capital market institutions in the offering of debt instruments through crowdfunding in securities. This contributes to deepening the debt instruments market and enhancing its attractiveness to issuers and investors, in alignment with the CMA's strategic objectives.

Key approved elements include enabling capital market institutions to offer debt instruments in the Sukuk/Bonds Market, provided having a securities arranging license to conduct the activity. This also allows firms holding a FinTech Experimental Permit or those interested in providing the activity to obtain the appropriate license to practice it as a capital market institution. The initiative supports the diversification and sustainability of corporate funding sources and facilitates broader investor access to debt instruments, the regulator said.

Under the approved regulatory framework, capital market institutions are required to obtain a securities arranging license if they intend to conduct this type of offering. This enables them to offer debt instruments through securities crowdfunding platforms as one of the exempt offering cases in accordance with the Rules on the Offer of Securities and Continuing Obligations, with the possibility of using private placements to expand the scope and size of the targeted offering, it added.

Another key element of the framework includes the development of the requirements for registrable functions and the requirements for safeguarding client funds for capital market institutions licensed to conduct Arranging activities in the course of securities crowdfunding.

FinTech companies authorized to practice the mentioned activity in the FinTech Lab will continue operating until the expiry of their permits. Afterwards, they may apply for the appropriate license to conduct the activity in accordance with the provisions of the adopted regulatory framework. It should be noted that new applications to conduct this activity in the FinTech Lab will no longer be accepted at CMA, unless they involve an innovative aspect requiring testing, in light of the issuance of the regulatory framework enabling its practice by capital market institutions.

According to the statement, the debt offering and investment model witnessed growing activity during their Experimental phase in the FinTech Lab, recording remarkable growth in 2024.

Last year, the value of sukuk issued through this model rose to approximately SAR 3.4 billion compared to SAR 1.5 billion in 2023. The number of permits granted for this purpose also increased to 17 in 2024, from 14 in the previous year.

This approval comes as part of efforts to enhance the debt instruments market and broaden its investor base by enabling capital market institutions licensed to conduct arranging activities to offer debt instruments through securities crowdfunding platforms.

On March 20, the CMA sought public input on the draft “Regulatory Framework for Debt Instruments Offering Platforms and Investing in Them", through its Istitlaa platform, for 30 calendar days.

To view the amended regulations and rules pursuant to this decision, please click on:

The Rules on the Offer of Securities and Continuing Obligations

The Rules for Special Purposes Entities

The Capital Market Institutions Regulations