RIYADH: Ƶ’s Capital Market Authority has unveiled a plan for 2024-2026 to develop a robust debt market and enhance the international competitiveness of its asset management industry.
The strategy emphasizes safeguarding investors’ rights by increasing transparency and ensuring market integrity. It revolves around three main pillars and includes over 40 initiatives aimed at boosting market growth and efficiency. A key aspect of this approach is enhancing the stock market’s role in capital raising.
To achieve this, the authority plans to introduce special purpose acquisition companies on the parallel market and facilitate the issuance of Saudi depositary receipts. These measures are designed to offer more diverse investment opportunities and make the market more attractive to both domestic and international investors.
Highlighting the plan’s bold objectives, CMA Chairman Mohammed El-Kuwaiz said: “Our new strategy emphasizes the creation of a robust debt market, the enhancement of the asset management industry, and the attraction of increased investments to the national economy.”
The top official made these remarks during the Debt Markets and Derivatives Forum held in Riyadh last week.
The undertaking will build on past successes while aligning with Saudi Vision 2030, which supports the national economy by facilitating an advanced financial ecosystem and attracting international investments.
The plan focuses on increasing transparency, spurring innovation in financial technology, and expanding financing options. It represents a significant step toward realizing the goals of Saudi Vision 2030, which seeks to enhance the national economy by creating a sophisticated financial ecosystem and attracting global investments.
These initiatives are designed to build on past achievements and position Ƶ as a leading financial hub in the region.
Additionally, the CMA is focusing on developing the sukuk and debt instruments market by creating regulatory frameworks for green, social, and sustainable debt instruments. This aligns with the global push toward environmental, social, and governance criteria.
To stimulate market activity and support Ƶ’s broader financial sector development goals, the CMA is simplifying the regulatory processes for offering, listing, and registering debt instruments. The objectives include increasing the stock market’s value to 80.8 percent of gross domestic product by 2025, up from 66.5 percent in 2019, and expanding the debt instruments market to 24.1 percent of GDP by the same year.
Central to this strategy is a strong emphasis on investor protection, which involves enhancing market transparency and supervisory mechanisms.
In response to recent increases in penalties and compensation for market violations, El-Kuwaiz highlighted the importance of protecting investor interests. “Trust is vital for a successful market,” he said, underscoring the CMA’s commitment to developing class action compensation procedures and improving the resolution process for complaints between financial institutions and their clients. These efforts are aimed at creating a transparent, accountable market environment that strengthens investor confidence.
The CMA’s plan also emphasizes empowering the financial market ecosystem, particularly through support for financial technology, or fintech.
Recognizing the crucial role of technology in fostering competition and efficiency within the financial sector, the CMA intends to promote the growth of fintech companies and facilitate open finance applications within the market framework. This strategy aims to integrate advanced technologies into the financial sector, streamlining operations and enhancing user experiences.
Building on the successes of the CMA’s 2021-2023 agenda, which saw a significant 52 percent increase in the number of listed companies—from 204 in 2019 to over 310 by the end of 2023—the new strategic plan seeks to further advance the market. These achievements have laid a solid foundation for the current strategy, highlighting the global recognition of the Saudi financial market’s expanding prominence.
The new plan aims to enhance the market’s appeal to foreign investors, with the goal of establishing the Saudi financial market as a regional and international leader by the end of 2026. This includes doubling the number of companies licensed to engage in fintech activities and increasing the volume of managed assets.
A notable aspect of the plan is its comprehensive approach to regulatory reforms and market development. This includes reforms to regulatory frameworks for offerings and listings, the development of investment fund regulations, and improvements to class action compensation procedures. The CMA’s focus on enabling more flexible fund structures and advancing the asset management industry reflects a forward-thinking approach to market growth and sophistication.
The CMA’s initiatives reflect the Kingdom’s ambition to position itself as a leading regional and global financial hub. By concentrating on ESG-aligned financial instruments, enhancing market transparency, and prioritizing investor protection, the CMA is laying the groundwork for a sustainable and resilient market environment.
