Overview
On 8 September 2026, the Capital Market Authority (CMA) issued Circular No. 2612903 (the “Circular”) addressed to all capital market institutions. The Circular gives effect to a resolution of the CMA Board requiring managers of public money market funds to observe new restrictions on: (i) the proportion of fund assets that may be invested outside the Kingdom of Saudi Arabia; and (ii) the credit quality of counterparties to those investments. Managers should assess affected portfolios and plan for compliance within the transition periods described below. These requirements apply alongside the Investment Funds Regulations.
Cap on overseas investments
The Circular introduces a cap of 5% of a public money market fund’s net asset value (NAV) on investments outside the Kingdom. Where a fund’s overseas investments exceed this threshold, its manager must take the necessary measures to achieve compliance within no more than two years from the date of the Circular. During the transition period, fund managers must refrain from making any investment, or entering into or renewing any transaction, that would breach the 5% limit.
Where a fund’s overseas investments exceed 20% of NAV, an accelerated compliance timeline applies. The fund manager must reduce those investments to below 20% of NAV within six months of the date of the Circular. The 5% cap must then be met within the same overall two-year period, measured from the Circular’s date.
Counterparty credit rating requirement
All investments of a public money market fund outside the Kingdom must be made with counterparties that hold an investment-grade credit rating issued by a licensed credit rating agency. Fund managers with existing overseas investments that do not meet this requirement must take the necessary corrective measures within no more than two years from the date of the Circular.
Key compliance deadlines
The transition periods run from 8 September 2026, the date of the Circular:
- Within six months: funds whose overseas investments exceed 20% of NAV must reduce those investments to below 20% of NAV.
- Within two years: funds must bring existing non-compliant overseas investments into compliance with the 5% NAV cap and the counterparty credit rating requirement, as applicable.
- During the transition: managers must observe the restriction on investments and new or renewed transactions that would breach the 5% cap.
Practical implications for fund managers
Fund managers should review overseas investments against the NAV thresholds and the counterparty rating requirement, and document a plan for any necessary reduction or reallocation. This should include reviewing the underlying placement and transaction documents to assess maturity and renewal provisions, early withdrawal or termination rights, and any related restrictions, notice requirements or costs. Controls over new investments and renewals should reflect the Circular’s restrictions.
Managers should also assess whether changes to investment strategy or permitted investments require updates to fund terms and conditions, risk disclosures or investor communications, and follow the applicable approval and notification procedures.
Our Saudi financial services regulatory and funds team at Ashurst Perkins Coie can assist with assessing the Circular’s implications, reviewing fund documentation and underlying placement and transaction documents.
Please feel free to contact us for a discussion.
Other key contacts: Rayan AlMadani, Senior Associate and Majed AlSaggaf, Junior Associate.
