Saudi Arabia’s Capital Market Authority (CMA) has announced its strategic plan for 2024-2026, aiming to advance the Kingdom’s financial market and boost its global standing. This initiative, comprising over 40 projects, is designed to align with Vision 2030, transforming the capital market into a vital economic component.
Bloomberg’s Constantin Cotzias underscores the strategy’s importance in fostering economic diversification through financial growth and integration. The plan targets expanding financing avenues, promoting investments, and attracting international capital, with a focus on the sukuk and debt markets to fund significant infrastructure and sustainable ventures.
Strategic Pillars
The CMA’s strategy revolves around three pillars: market growth, ecosystem enablement, and investor protection. The first pillar emphasizes enhancing the stock market’s role in capital raising, developing debt instruments, and boosting asset management to draw international investment. Increasing the debt instruments market to 24.1% of GDP by 2025 is a key target, necessitating regulatory reforms to improve global market access and liquidity.
The second pillar focuses on fostering the capital market ecosystem through support for financial institutions and fintech innovation. The CMA plans to double licensed fintech firms by 2026, emphasizing open finance and regulatory support for startups. The Fintech Lab initiative offers a controlled environment for fintech growth, balancing oversight with innovation.
The third pillar prioritizes investor protection by enhancing transparency and supervisory mechanisms. Improvements in compensation and dispute resolution are essential for building investor confidence, particularly among retail investors.
Key Initiatives
Among the CMA’s initiatives are the introduction of Special Purpose Acquisition Companies in the parallel market and Saudi Depositary Receipts, aimed at diversifying investment opportunities. The CMA is also working on frameworks for green, social, and sustainable debt instruments, aligning with global standards to attract green finance investments.
The CMA’s green sukuk initiative is pivotal for combining Islamic finance with sustainability goals. By 2025, the CMA aims to elevate the stock market’s value to 80.8% of GDP, up from 66.5% in 2019, through sustainable investments and streamlined regulations.
Focus on Fintech and Innovation
The CMA is committed to supporting fintech innovation, allowing startups to experiment with new models within a regulatory sandbox. This approach enhances market efficiency and competitiveness, encouraging traditional financial entities to innovate and meet evolving investor needs.
Achievements and Future Targets
Building on past successes, the CMA’s new plan targets further asset management growth and regulatory flexibility for investment funds. Easing foreign investor barriers is crucial for enhancing Saudi Arabia’s competitiveness, especially in real estate, renewable energy, and tech sectors.
International Competitiveness
The CMA aims to make Saudi Arabia a leading financial hub by reforming regulations, boosting transparency, and promoting ESG-aligned products. Diversifying financial offerings, particularly in Islamic finance, will help the Kingdom stand out against regional rivals.
Investor Protection and Governance
Strengthening investor rights and corporate governance is central to the CMA’s strategy. By enhancing accountability and simplifying compensation and complaints procedures, the CMA seeks to foster a transparent and accountable market.