CMA seeks public input on draft regs for debt crowdfunding platforms

Logo of Capital Market Authority (CMA)

The Capital Market Authority (CMA) called on stakeholders and interested capital market players to share their feedback on the draft regulations for debt crowdfunding service providers (CSPs) in Saudi Arabia.

The draft framework aims to enhance the debt issuance process through licensed financial institutions authorized to conduct arranging activities under securities-based crowdfunding.

The consultation period runs for 30 days until April 23.

The proposed framework sets regulatory requirements for CSPs, including licensing conditions, to align with market developments and strengthen the sector’s regulatory environment.

Key elements include enabling licensed financial institutions to offer debt instruments in the sukuk and bonds market, subject to approval. It also clarifies licensing requirements, allowing fintech firms in the regulatory sandbox to obtain their respective licenses. This is expected to expand corporate funding options, improve financial sustainability, and boost investor access to debt instruments.

The draft regulations will also enhance registration requirements for key personnel and custody rules for client funds held by financial institutions authorized for arranging activities within debt crowdfunding.

Under the new framework, financial institutions must secure an arranging license to conduct these offerings. This allows them to issue debt instruments via CSPs under the exempt offering provisions in the CMA regulations.

This is set to boost fintech participation by increasing the number of licensed financial institutions in technology-driven financial activities. It will also strengthen their role in debt crowdfunding, hence deepening the debt market and enhancing its appeal to issuers and investors, in line with the CMA’s strategic goals.

CSPs have been out to test in the CMA’s fintech regulatory sandbox. With sufficient data collected, the initiative is now being considered for full implementation as a regulated financial service.

The CMA emphasized that inputs of interested persons will be taken into full consideration for the purpose of approving the final framework, which in turn will help enhance and develop the regulatory environment.

Feedback can be received through the public consultation platform Istitlaa.