Saudi Arabia's Capital Market Authority has set a new limit requiring public money market funds to keep their total foreign investments and assets held outside the Kingdom at or below 5% of each fund's net asset value (NAV). The cap covers all foreign assets, regardless of instrument type, when they are located outside Saudi Arabia.
Fund managers whose portfolios currently exceed the 5% threshold must bring their funds into full compliance within a maximum of two years from the date of the regulatory circular imposing the cap. During this transition period, managers are barred from entering, renewing, or expanding any transaction that would breach or further breach the limit until the fund is fully compliant.
A tighter timeline applies to funds with heavier foreign exposure. Public money market funds whose foreign investments exceed 20% of NAV must reduce that exposure to below 20% within six months of the circular date, then keep reducing it until the final 5% cap is reached within the overall two-year window.
The rules also require that all foreign investments be made only with counterparties holding investment-grade credit ratings issued by licensed credit-rating agencies, adding a quality safeguard to any exposure held abroad.
Why it matters
Money market funds are widely used by residents and businesses seeking low-risk, liquid places to park cash. The new limits are aimed at keeping fund assets closer to home and tied to higher-rated counterparties, which supports stability for savers. Implementation and supervision run through the Capital Market Authority's regulatory channels and the licensed fund managers' internal compliance and reporting systems. The measure concerns portfolio composition and exposure limits only, and no fixed fee schedule in Saudi Riyal is attached to the cap.
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