The Saudi Capital Market Authority (CMA) has published on Wednesday the draft instructions on Real Estate Investment Traded Funds (REITFs) on its website public consultation to consider the opinions of experts and concerned parties. The instructions are intended to regulate the offering of traded real estate investment funds, which primary investment objective is to invest in construction developed real estates that generate periodic income, and distribute a perspective percentage of the fund's net income in cash to unit holders. Under the draft instructions, the fund manager must appoint a property management company specialized in managing properties (property management company) - after ensuring that the approvals required by relevant governmental agencies are obtained - to manage the property held for investment. The company should possess the necessary experience in real estate management and should be responsible for all services related to property management including, but not limited to, property management, property maintenance, leasing services and rent collection. CMA developed these instructions after coordinating with competent entities, particularly the Ministry of Housing to achieve common goals. It also explored best international practices and standards in this domain. CMA stresses that all received suggestions and comments will be taken into consideration to give experts and concerned parties the opportunity to express their observations which reflects positively on the development of the capital market. This step comes as a continuation of the CMA's role in regulating and developing the capital market and enacting legislations that help in introducing new financial instruments and diversifying investment opportunities in line with the National Transformation Program 2020 and the Kingdom's Vision 2030. The industry of asset management is one of CMA's main securities business activities. Asset management contributes to providing a variety of investment products and professional management of customer assets while increasing professional practices and institutional behavior in the market. Based on its Strategic Plan (2015 -2019), CMA seeks to implement a number of initiatives to strengthen the growth of this industry, most notably supporting investment products distribution channels, updating related regulations, increasing client asset protection and supporting occupational qualification for professionals working in the asset management field as well as promoting investor awareness. CMA is working on updating and amending a number of rules and regulations as part of its role to develop the capital market, increase its efficiency and ensure fairness and transparency in market transactions in accordance with the functions entrusted to it under the Capital Market Law. CMA pointed out that it welcomes suggestions and comments via its several channels which include e-mail, fax and regular mail.
