Saudi Central Bank Has Been Working to Establish Netting Regulations and Framework for the Saudi Market

Riyadh, 19 February 2024: Yazeed Alnafjan, Deputy Governor for Financial Innovation at the Saudi Central Bank (SAMA) disclosed that SAMA has been working on establishing netting regulations and developing a comprehensive framework for the Saudi market for some time. 

Speaking at the third edition of the Saudi Capital Market Forum, Alnafjan outlined that the incentive is to enhance financial stability and resilience of the financial sector, especially in terms of market stress and counterparty default, given increasing interconnectivity between Saudi banks and systems with international markets. 

He went on to state that a netting framework will align Saudi Arabia with international best practices, driven by SAMA’s aim to ensure the Saudi financial sector remains attractive and better facilitation with international markets. 

Alnafjan stated that the netting regulations would allow SAMA to ask the banks to re-shore a lot of the transactions that are sitting offshore currently, moving from the traditional model of having special purpose vehicles offshore to benefit from netting, to moving it onshore and further concentrate liquidity in the market without impacting financial stability.