Saudi Gazette report

RIYADH — The Capital Market Authority (CMA) board has approved the regulatory framework enabling capital market institutions licensed for "arranging" activities to offer debt instruments in the sukuk and debt market through securities crowdfunding platforms.

The framework follows the experimental phase, which began in the second quarter of 2021, and it is now considered one of the activities that can be conducted under the license to practice securities business in arranging.

The CMA also approved amendments to the Rules on the Offer of Securities and Continuing Obligations, the Rules for Special Purposes Entities, and the Capital Market Institutions Regulations, which will come into effect as of their publication date.

The regulatory framework aims to increase the number of capital market institutions engaged in fintech (finance technology) activities, as well as expanding the participation of capital market institutions in the offering of debt instruments through crowdfunding in securities. This contributes to deepening the debt instruments market and enhancing its attractiveness to issuers and investors, in alignment with the CMA's strategic objectives.

Key approved elements include enabling capital market institutions to offer debt instruments in the Sukuk and Debt Instruments Market, with the requirement that they obtain an "Arranging" license to conduct the activity. This also allows firms holding a FinTech Experimental Permit or those interested in providing the activity to obtain the appropriate license to practice it as a capital market institution. The initiative supports the diversification and sustainability of corporate funding sources and facilitates broader investor access to debt instruments.

According to the approved regulatory framework, capital market institutions are required to obtain an "Arranging" license in securities activities if they intend to conduct this type of offering. This enables them to offer debt instruments through securities crowdfunding platforms as one of the exempt offering cases in accordance with the Rules on the Offer of Securities and Continuing Obligations, with the possibility of using private placements to expand the scope and size of the targeted offering.

Another key element of the framework includes the development of the requirements for registrable functions and the requirements for safeguarding client funds for capital market institutions licensed to conduct “Arranging” activities in the course of securities crowdfunding.

Fintech companies authorized to practice the mentioned activity in the FinTech Lab will continue operating until the expiry of their permits. Afterwards, they may apply for the appropriate license to conduct the activity in accordance with the provisions of the adopted regulatory framework. It should be noted that new applications to conduct this activity in the FinTech Lab will no longer be accepted at CMA, unless they involve an innovative aspect requiring testing, considering the issuance of the regulatory framework enabling its practice by capital market institutions.

Debt offering and investment model witnessed growing activity during their Experimental phase in the FinTech Lab, recording remarkable growth in 2024. The value of sukuk issued through them rose to approximately SR3.4 billion compared to SR1.5 billion in 2023. The number of permits granted to practice this model also increased to 17, up from 14 in the previous year.

The CMA approval comes as part of efforts to enhance the debt instruments market and broaden its investor base by enabling capital market institutions licensed to conduct arranging activities to offer debt instruments through securities crowdfunding platforms. It forms part of the draft titled "Regulatory Framework for Debt Instruments Offering Platforms and Investing in Them,” which was previously published by the CMA on March 20, 2025, on the Unified Electronic Platform for Consulting the Public and Government Entities to the National Competitiveness Center and the CMA's website.