RIYADH: Saudi Arabia’s Capital Market Authority approved a regulatory framework enabling licensed firms to offer sukuk and debt instruments through crowdfunding platforms, expanding financing access and diversifying funding sources.
The framework, effective immediately, applies to institutions licensed for “arranging” activities and follows an experimental phase that began in the second quarter of 2021.
The authority introduced amendments to the Rules on the Offer of Securities and Continuing Obligations, the Rules for Special Purpose Entities, and the Capital Market Institutions Regulations.
The CMA aims to broaden participation in the debt market, deepen its structure, and enhance liquidity by enabling crowdfunding-based debt offerings as part of exempt cases under the offering rules. Private placements are also permitted, potentially increasing the scope and size of such offerings.
“The framework is designed to increase the number of capital market institutions engaged in fintech activities and supports diversification and sustainability of corporate funding sources,” the CMA said.
During the experimental phase, the sukuk crowdfunding market witnessed growth, with issuance rising to SR3.4 billion ($905.94 million) in 2024 from SR1.5 billion in 2023. The number of firms licensed under the framework increased to 17, up from 14 the previous year.
The CMA also introduced governance reforms for SPEs, aimed at streamlining procedures and facilitating securitization transactions.
Amendments broaden the eligibility criteria for sponsors, allow debt issuance via exempt offerings, and clarify the roles of board members and fund managers. They also mandate independent trustees to represent debt holders and require that board members be unaffiliated with sponsors or originators.
The number of licensed SPEs rose to 1,239 by mid-2025, an 87.2 percent increase from the previous year, reflecting growing interest from fintech firms and small and medium-sized enterprises.
The reforms are expected to boost liquidity, enhance market depth, and create new investment opportunities, particularly in the sukuk and asset-backed financing segments.
The CMA’s recent regulatory actions reflect the continued expansion and diversification of Saudi Arabia’s capital markets.
By the end of the second quarter of 2025, individual investment portfolios rose nearly 12 percent year on year to 13.91 million, while managed portfolios grew 29.5 percent. Total assets in these portfolios reached SR352.6 billion.
The growth, alongside rising foreign investments and stronger engagement in international markets, underscores increasing investor participation and interest in a broader range of financial instruments beyond traditional equities.
