Saudi CMA proposes easing capital rules for securities activities
Regulatory reforms aim to ease market entry and modernize rules for Saudi Arabia's growing capital markets sector.
RIYADH: Saudi Arabia has proposed cutting the minimum capital requirement for securities businesses by 60 percent to SR20 million ($5.33 million), as part of broader reforms aimed at easing market entry and modernizing regulations.
The proposed amendments, released by the Capital Market Authority (CMA) for public consultation, would also introduce differentiated capital requirements for securities dealing activities based on their risk profile, while tightening technology governance and compliance standards.
Under the draft rules, the activities of dealing as principal, underwriting, and executing transactions on a margin basis have been grouped together and would require minimum capital of SR20 million.
The dealing as agent activity would require SR10 million.
The CMA also proposed a SR2 million minimum capital requirement for securities crowdfunding activities involving client fund holdings.
The reforms come as Saudi Arabia’s capital market sector grows rapidly, with the number of institutions rising to 215 by the end of 2025 from 86 in 2017, according to the CMA.
The Kingdom is moving ahead with financial market reforms under Vision 2030.
Tony Hallside, CEO of STP Partners, said: “By recalibrating capital requirements across different securities activities, the CMA is moving toward a more risk-sensitive regulatory framework that aligns capital obligations more closely with the nature and complexity of underlying risks”.
He added: “Saudi Arabia’s proposed amendments represent a measured and constructive step in the continued development of the Kingdom’s capital markets.
This is an important evolution for a market that is continuing to deepen in sophistication and scale”.
The proposed changes would also ease licensing and commencement requirements by removing the need to submit certain documents, including proposed terms of business and business continuity plans.
“The inclusion of clearer requirements around activities such as securities-based crowdfunding also reflects a regulatory willingness to support innovation within a controlled and well-governed framework,” said Hallside.
The draft rules also propose allowing companies licensed solely for advising activities to engage in other businesses or professions, subject to specified controls.
This would give them greater flexibility.
The CMA also proposed updating Know Your Client (KYC) requirements by linking them to customers’ money laundering and terrorism financing risk classifications.
Designated forms would be introduced to support implementation.
The new changes are expected to lower barriers to entry, reduce compliance burdens, and foster growth in the sector while maintaining robust risk management.
The draft rules further strengthen technology and cybersecurity oversight by expanding the requirement for registered information technology officers to cover institutions using technology platforms for securities services.
Firms would also be required to test technology and information security arrangements at least annually.
“From a market structure perspective, these reforms reinforce Saudi Arabia’s long-term commitment to building a deeper, more accessible, and internationally competitive capital market,” said Hallside.
He concluded: “For investors and market participants, the key will be ensuring that greater flexibility is matched by strong governance, AML controls, and operational resilience to sustain confidence, transparency, and long-term market stability”.
The regulator said the consultation period will run for 30 days until June 17.
The proposed amendments, released by the Capital Market Authority (CMA) for public consultation, would also introduce differentiated capital requirements for securities dealing activities based on their risk profile, while tightening technology governance and compliance standards.
Under the draft rules, the activities of dealing as principal, underwriting, and executing transactions on a margin basis have been grouped together and would require minimum capital of SR20 million.
The dealing as agent activity would require SR10 million.
The CMA also proposed a SR2 million minimum capital requirement for securities crowdfunding activities involving client fund holdings.
The reforms come as Saudi Arabia’s capital market sector grows rapidly, with the number of institutions rising to 215 by the end of 2025 from 86 in 2017, according to the CMA.
The Kingdom is moving ahead with financial market reforms under Vision 2030.
Tony Hallside, CEO of STP Partners, said: “By recalibrating capital requirements across different securities activities, the CMA is moving toward a more risk-sensitive regulatory framework that aligns capital obligations more closely with the nature and complexity of underlying risks”.
He added: “Saudi Arabia’s proposed amendments represent a measured and constructive step in the continued development of the Kingdom’s capital markets.
This is an important evolution for a market that is continuing to deepen in sophistication and scale”.
The proposed changes would also ease licensing and commencement requirements by removing the need to submit certain documents, including proposed terms of business and business continuity plans.
“The inclusion of clearer requirements around activities such as securities-based crowdfunding also reflects a regulatory willingness to support innovation within a controlled and well-governed framework,” said Hallside.
The draft rules also propose allowing companies licensed solely for advising activities to engage in other businesses or professions, subject to specified controls.
This would give them greater flexibility.
The CMA also proposed updating Know Your Client (KYC) requirements by linking them to customers’ money laundering and terrorism financing risk classifications.
Designated forms would be introduced to support implementation.
The new changes are expected to lower barriers to entry, reduce compliance burdens, and foster growth in the sector while maintaining robust risk management.
The draft rules further strengthen technology and cybersecurity oversight by expanding the requirement for registered information technology officers to cover institutions using technology platforms for securities services.
Firms would also be required to test technology and information security arrangements at least annually.
“From a market structure perspective, these reforms reinforce Saudi Arabia’s long-term commitment to building a deeper, more accessible, and internationally competitive capital market,” said Hallside.
He concluded: “For investors and market participants, the key will be ensuring that greater flexibility is matched by strong governance, AML controls, and operational resilience to sustain confidence, transparency, and long-term market stability”.
The regulator said the consultation period will run for 30 days until June 17.
