CMA seeks feedback on draft regulatory framework for omnibus accounts

Logo of The Capital Market Authority (CMA) 

The Capital Market Authority (CMA) is seeking feedback on the draft regulatory framework for omnibus accounts for a period of 15 days ending July 18, 2024.

The draft aims to develop the trading mechanisms available in the Saudi Exchange (Tadawul) and stimulate investment. Additionally, it seeks to enhance the market’s attractiveness and efficiency by allowing the opening of omnibus accounts, the regulator said in a statement.

An omnibus account is registered in the name of a capital market institution and opened by a licensed person to perform securities custody activities (custodian). This account includes a number of clients of the capital market institution (beneficiaries), for whom the institution is responsible for managing, monitoring, and handling the account on their behalf.

According to the proposed draft, the roles of custodians will be more active in omnibus accounts, enhancing the market’s appeal to new custodians. The custodian will be responsible for maintaining client records under each omnibus account and detailing individual ownership for each beneficiary. The capital market institution will be responsible for obtaining prior written consent from beneficiaries to register or record their assets in the name of the capital market institution and disclosing any risks that may arise from this

Omnibus accounts will enable capital market institutions (asset managers) to trade through these accounts, promoting fairness among clients sharing the same investment policy and acceptable risks in managed portfolios and investment funds. This will also streamline trading procedures and operational aspects, thereby boosting the asset management industry, offering new products, and expanding existing services, according to the statement.

The proposed regulatory framework includes provisions for capital market institutions to keep separate records and accounts that distinguish their assets from those of each client joined to the omnibus account, thus enhancing the protection of client assets

The CMA emphasized that the comments of relevant and interested persons shall be taken into full consideration for the purpose of finalizing the draft.