CMA approves regulation of robo-advisory services

Logo of Capital Market Authority (CMA)

The Capital Market Authority’s (CMA) board of directors has approved a draft bill for governing the provision of robo-advisory services, offered exclusively through licensed entities authorized to conduct investment and fund management activities.

The CMA’s endorsement of the new regulation followed pilot trials conducted by licensed FinTech companies within Saudi Arabia’s FinTech Regulatory Sandbox, according to a statement today, March 5.

Robo-advisory services will be carried out using algorithms and advanced technological tools to manage clients’ investments as per pre-defined investment strategies.

The new framework aims to enhance market efficiency and broaden the range of financial services offered Kingdom-wide through modern technologies, providing innovative and effective solutions for investors and introducing new investment channels suitable for different segments, particularly individual investors.

Accordingly, several requirements have been stipulated to ensure the safety and efficiency of the offered robo-advisory services. This includes mandating licensed entities to notify the CMA in advance of the strategies used to build and manage investment portfolios as well as any updates before offering them to clients on their platforms. These institutions are also required to establish control systems and procedures to ensure the reliability and efficiency of the algorithms and technological tools and to conduct periodic testing to verify their effectiveness at least 10 days prior to client access.

Eligible clients are only those whose investment portfolio is not concentrated in a single asset or securities of a single issuer. Additionally, if the service involves securities issued or listed outside the Kingdom, those securities must be supervised by a regulatory authority with standards at least equivalent to those applied by the CMA.

The regulations set detailed disclosure requirements, including explaining the strategies used to build and manage investment portfolios, criteria for asset selection, rules for allocation, and portfolio rebalancing methods, and the amendments also impose additional responsibilities regarding functional registration, including registering the Information Technology Officer responsible for managing and monitoring the technological systems used for service delivery.

Participating institutions are required to disclose on the platform through which robo-advisory services are offered the role of algorithms, the mechanisms used, and the associated risks in a fair, clear, accurate, and non-misleading manner appropriate for the classification of the targeted client segments.

Another requirement is the official documentation of the historical performance of managed investment portfolios since inception, including disclosure of the criteria and methodology for gauging portfolio performance and total returns achieved after deducting actual expenses. Participating institutions are required to publish this information on their official websites.

Data shows that assets managed through local FinTech platforms increased by 87% to SAR 6.41 billion by the end of Q4 2025, compared with SAR 3.43 billion in the same quarter of 2024. Likewise, the number of investment portfolios rose by 40%, reaching 534,571 in total by the end of Q4 2025, versus 382,616 portfolios in Q4 2024.

In August 2025, the CMA had sought public feedback the Proposed Regulatory Framework for Robo-Advisors.

The Draft Regulatory Framework for Robo-Advisory

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