CMA seeks feedback on draft amendment to investment fund regulations

Logo of Capital Market Authority (CMA)

The Capital Market Authority (CMA) seeks feedback of relevant and interested persons on the draft amendments to investment funds regulations for a period of 30 days ending July 12, 2024, according to the CMA website.

The draft aims to allow public funds to subscribe to debt instruments offered privately if issued by issuers within the Kingdom. This initiative is intended to facilitate the growth of the asset management industry, enabling public fund managers to subscribe with a larger number of debt instrument issuers by removing the restrictions imposed under the investment funds regulations.

This development is expected to increase the market's attractiveness to debt instrument issuers and enhance the appeal of fund investments in debt instruments by expanding the range of assets available for investment.

To enhance investor protection, the proposed draft requires money market fund managers and capital protection funds not to invest more than 10% of the fund's net asset value in debt instruments issued by a single issuer. This measure aims to limit risks and increase the diversity of the fund's portfolio.

According to the proposed draft, managers of public funds investing in debt instruments are required to disclose the credit rating of the debt instruments in the fund's quarterly statement, enhancing disclosure and transparency levels for investors in those funds.

The draft comes as part of the CMA's efforts to deepen the debt instruments market and increase its liquidity. This initiative aligns with the CMA's strategic plan, which aims to elevate the Saudi market's status and global ranking, thereby enhancing the capital market's attractiveness and efficiency, and boosting its regional and international competitiveness.

It also supports the capital market's role in capital formation as one of its strategic directions, with key objectives including developing the sukuk and debt instruments market, increasing liquidity in this sector, and growing it to become one of the world's leading emerging markets.

According to data available with Argaam, the number of investment funds hit a new record of 1,285 in 2023, compared to 607 funds in 2019, climbing by 111.7%.

The number of subscribers to investment funds jumped to more than 1.17 million by the end of 2023, up 251% from 334,200 subscribers in 2019.