Saudi Arabia's Capital Market Authority (CMA): Allowing Foreigners to Invest Directly in Debt Instruments

The CMA Board issued its resolution on 22/12/1441 H., corresponding to 12/08/2020G, which included allowing residents and non-residents foreigners to invest directly in listed and non-listed debt instruments. This comes as part of CMA's strategic goals to develop the capital market "Financial Leadership Program" and in line with "Financial Sector Development Program" one of the main programs to achieve the objectives of Saudi Vision 2030.

This resolution comes as a continuation of the CMA's endeavor to develop the debt instruments market by aligning its regulatory requirements with international best practices. In addition to that, the continuity of the approach of opening up the Saudi financial market to the world and enhancing the investment environment attractive for foreign investors, thus contributing to raising the efficiency of the market and increasing its competitiveness regionally and internationally. This resolution will also contribute to deepening the financial market, enhancing its role in capital formation, and diversifying investment products for foreign investor segments.

The CMA Board resolution included the following:

a) All foreign legal and natural persons may invest directly in debt instruments.

b) A non-resident foreign person may not invest in the market as a direct investor in listed debt instruments and as a qualified foreign investor or an ultimate beneficiary in swap agreements at the same time.

c) A foreign person who invests directly in debt instruments may not convert such instruments into shares listed in the Main Market, unless such person is among the categories of investors who are allowed to invest directly in the shares listed in the Main Market, or becomes an ultimate beneficiary in a swap agreement in accordance with the provisions of the Authority's instructions on swap agreements.

It is noteworthy that the Capital Market Authority worked on preparing a guide that aims to clarify the investment channels available for non-resident foreign investors, the methods of investing in listed securities, and the procedures of investment account opening. T