The CMA calls for public consultation on the draft regulatory framework for the offshore securities business license
The proposed draft aims to enhance the Kingdom's position as a regional and global financial hub for securities by enabling local capital market institutions and attracting a number of international capital institutions, by granting them an Offshore Securities Business License through their regional headquarters licensed by the Ministry of Investment, and by adopting the regulatory framework for this activity.
According to the proposed draft, the CMA will allow capital market institutions, both local and international, to apply for an Offshore Securities Business License, provided they obtain a regional headquarters license from the Ministry of Investment. This Offshore Securities Business License will enable such institutions to conduct securities activities outside the Kingdom, as well as manage funds investing in securities within the Kingdom. These services may be offered to foreign clients abroad, in addition to a specified category of local clients.
The proposed draft includes a set of facilitations for obtaining the Offshore Securities Business License. These include eased requirements related to legal structure, minimum paid-up capital, registration of required positions, financial adequacy obligations, and other relevant conditions, aligned with leading international standards and global best practices suitable for the Saudi capital market.
The CMA is also working to enable holders of the Offshore Securities Business License to establish investment funds in the Kingdom with flexible structures through its strategic initiative titled "Enabling the Establishment of More Flexible Fund Structures". It also aims to enhance investment opportunities in regional financial markets and expand the client base by allowing engagement with sovereign wealth funds and pension funds in the Kingdom.
Furthermore, a legal entity affiliated with a local capital market institution and holding a license from the Ministry of Investment will also be eligible to apply for the Offshore Securities Business License.
The proposed draft will contribute to diversifying the investor base associated with capital market institutions, in addition to enhancing the volume of assets under management in the Saudi capital market, positively impacting the attractiveness of the local market.
The proposal to grant the license aligns with efforts to develop the financial sector and complements the Regional Headquarters Program as it pertains to financial institutions offering securities services. This initiative is expected to help attract knowledge and facilitate the transfer of expertise within the securities sector.
It is worth noting that the license will be subject to the laws and regulations of the Kingdom, including the Capital Market Law and its implementing regulations, in accordance with the specific regulatory framework defined in the relevant regulations based on the scope of securities business conducted. The license will carry fewer regulatory requirements than existing licenses.
The CMA emphasized that the comments of relevant and interested persons shall be taken into full consideration for the purpose of approving the final Proposed Amendments, which in turn shall contribute to the aim of enhancing and developing the regulatory environment.
Opinions and comments can be received through any of the following:
•The Unified Electronic Platform for Consulting the Public and Government Entities (Public Consultation Platform), affiliated with the National Competitiveness Center through the following link: (istitlaa.ncc.gov.sa).
•The prescribed form through the following email: (Laws.Regulations@cma.org.sa).
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