CMA seeks public input on draft investment funds regulatory framework

The Capital Market Authority (CMA) called on stakeholders and interested capital market players to share their feedback on the draft to investment funds regulatory framework in Saudi Arabia.

The consultation period runs for 30 days until March 7.

The move aims to enhance the regulatory framework for investment funds by strengthening the asset management industry and boosting its competitiveness by identifying areas for development and adopting global best practices, said the market regulator.

This is besides seeking higher transparency and disclosure levels for investment funds’ unitholders, while ensuring governance standards that protect investor rights, in line with the CMA's strategic objectives to bolster asset management in the Kingdom, it added.

The announcement of this draft framework came in tandem with a significant milestone achieved by the CMA-affiliated entities, as the total assets under management (AUMs) surpassed the SAR 1 trillion mark by the end of 2024.

The key amendments focused on enhancing the efficiency of investment fund management by enabling the distribution of fund units through customized platforms and companies licensed by the Saudi Central Bank (SAMA) to provide e-wallet services. This is besides improving provisions for terminating investment funds and dismissing fund managers.

They also outline certain provisions for the voluntary withdrawal of public and private fund managers, who will be required to obtain the CMA approval beforehand, while also being obligated to handover management responsibilities to the successor within 60 days of receiving the CMA nod.

This should help ensure the protection of investors' rights in public, private, and real estate investment funds, in addition to facilitating a smooth transition of fund management, safeguarding unit holders' interests, and boosting investor confidence in the Saudi capital market.

As for real estate investment funds listed on the Nomu-Parallel Market, the proposed amendments include allowing these funds, upon their establishment, to invest in real estate development projects without being bound by the investment policy thresholds and asset restrictions stipulated in the Real Estate Investment Funds Regulations.

These changes are poised to expand investment opportunities for local real estate funds, support their asset diversification, and underscore their investment flexibility, hence enhancing their potential return on investment.

The draft framework also aims to allow capital market institutions that are licensed to conduct investment management activities to distribute foreign funds and offer their securities in Saudi Arabia, based on certain requirements. This initiative seeks to enable clients in the Kingdom to invest in foreign funds.

Furthermore, the proposed amendments cover the development of several other regulatory provisions aimed at fostering the growth of the investment fund and real estate investment fund sectors.

The CMA emphasized that inputs of interested persons will be taken into full consideration for the purpose of approving the final framework, which in turn will help enhance and develop the regulatory environment.

The Draft can be viewed:

The Draft Amendment to the Investment Funds Regulations, Real Estate Investment Funds Regulations, and Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority