The Capital Market Authority (“CMA's") Board has approved amendments to the Capital Market Institutions Regulations, which include regulating the provision of robo-advisory services using algorithms and modern technological tools to manage clients' investments in accordance with pre-determined investment strategies. These services shall be provided through Capital Market Institutions licensed to conduct Managing Investments activities, or Managing Investments and Operating Funds activities, following the pilot implementation of such services by authorized Fintech companies within the FinTech Lab, and allowing their provision by Capital Market Institutions licensed to conduct investment management activities.
The approved amendments aim to enhance market efficiency and expand the scope of financial services delivered through modern technologies, by providing innovative and effective solutions for investors and opening new investment channels that cater to different investor segments, particularly individual investors.
The approved regulatory amendments include a number of requirements aimed at ensuring the safety and efficiency of services provided through robo-advisory, whereby Capital Market Institutions are required to notify the CMA in advance of the strategies adopted in constructing and managing investment portfolios, as well as any material updates, prior to making them available to clients on the platform. The amendments also require Capital Market Institutions to establish supervisory systems and procedures that ensure the integrity and efficiency of the algorithms and technologies used, and to conduct periodic testing to verify the reliability and effectiveness of such technologies in achieving their intended objectives, at least ten days prior to offering the service to clients on the platform.
The approved amendments permit Capital Market Institutions licensed to conduct Managing Investments activities, or Managing Investments and Operating Funds activities, to provide robo-advisory services, provided that the investment portfolio is not concentrated in a single asset or in securities issued by a single issuer. If the robo-advisory service involves securities issued or listed outside the Kingdom, those securities must be subject to the supervision of a regulatory authority with standards and regulatory requirements at least equivalent to those applied by the CMA.
The Regulations set disclosure standards for Capital Market Institutions regarding the details and operational mechanism of the robo-advisory service provided to clients, including clarification of the strategies used in constructing and managing investment portfolios, asset selection criteria, allocation rules, and portfolio rebalancing mechanisms. The Regulations also introduce additional requirements related to functional registration, including the requirement for institutions to register the Information Technology Officer responsible for managing and overseeing the technological systems used in providing the robo-advisory service.
The approved amendments also require Capital Market Institutions to disclose, on the platform through which the robo-advisory service is provided, the role of the algorithms and mechanisms relied upon in delivering the robo-advisory service, as well as the associated risks, in a fair, clear, accurate, and non-misleading manner, and in a way that is appropriate to the classification of the targeted client segments.
In accordance with the approved amendments, Capital Market Institutions are required to disclose the performance track record of investment portfolios since inception, including clarification of the standards and bases used to measure investment portfolio performance and the total returns achieved after deducting actual expenses, and to publish such information on the websites of Capital Market Institutions.
It is worth noting that assets under management through Fintech platforms increased by 87%, reaching SAR 6.41 billion by the end of the fourth quarter of 2025, compared to SAR 3.43 billion in the same quarter of 2024. In addition, the number of investment portfolios increased by 40%, reaching 534,571 portfolios by the end of the fourth quarter of 2025, compared to 382,616 portfolios in the fourth quarter of 2024.
The CMA had sought public consultation in late August 2025 on “The Draft Regulatory Framework for Robo-Advisory" on the Unified Electronic Platform for Consulting the Public and Government Entities (Public Consultation Platform) affiliated with the National Competitiveness Center and the CMA's website.
To view the amended Capital Market Institutions Regulations (click here).
To view the amended Glossary of Defined Terms Used in the Regulations and Rules of the Capital Market Authority (click here).
