Capital Market Authority Issues Close-out Netting Regulation

Key Takeaways for Financial Market Participants

On July 2, 2025, the Saudi Capital Market Authority ("CMA") issued the Close-out Netting and Related Collateral Arrangements Regulation ("Regulation"), establishing a comprehensive legal framework for the enforceability of netting agreements and related collateral arrangements involving qualified financial contracts. The Regulation aims to provide legal certainty for financial market participants, particularly in the context of bankruptcy proceedings.

Scope of Application

The Regulation applies to netting agreements and financial collateral arrangements connected to one or more qualified financial contracts under the CMA's supervision, where at least one party is a capital market institution. The framework is designed to ensure that such agreements are enforceable according to their terms, both outside and during bankruptcy proceedings, subject to the powers of the CMA and relevant Saudi laws.