CMA caps overseas investments of money market funds at 5%

Logo of Capital Market Authority (CMA)

The Capital Market Authority (CMA) decided to require managers of public money market funds to ensure that investments and assets of a public money market fund outside Saudi Arabia do not exceed 5% of the fund’s net asset value (NAV).

All overseas investments must also be with counterparties that have an investment-grade credit rating issued by a licensed credit rating agency.

In a circular to capital market institutions, the CMA said if overseas investments exceed this limit, fund managers must take the necessary measures to comply within no more than two years from the date of the circular. This includes refraining from making investments or entering into or renewing any transaction that would breach the limit.

The CMA added that if a public money market fund’s overseas investments exceed 20% of its NAV, the fund manager must take the necessary measures to reduce them to below 20% within a maximum of six months from the date of the circular. The fund must then comply with the 5% limit outlined above.

The CMA also confirmed that all overseas investments by public money market funds must be with counterparties holding an investment-grade credit rating issued by a licensed credit rating agency. If existing overseas investments do not meet this requirement, fund managers must take the necessary measures to comply within no more than two years from the date of the circular.

The CMA called on all capital market institutions to comply with the circular and the Capital Market Law and its implementing regulations, noting that the measure is part of its ongoing role in regulating the financial market and monitoring and supervising the activities of entities under its oversight.