Saudi Arabia's Capital Market Authority (CMA) has introduced new restrictions on margin financing in foreign securities markets, prohibiting Saudi-regulated financial institutions from financing purchases of leveraged exchange-traded funds (ETFs) and certain other high-risk instruments.
Announced on October 29, 2026, the measures require investors using margin financing for eligible overseas securities to provide at least 50% of the transaction value upfront, while maintaining minimum equity coverage of 25% throughout the investment. The restrictions apply to capital market institutions regulated by the CMA when facilitating transactions outside Saudi Arabia, including arrangements involving foreign brokers.
What Has Changed for Margin Trading?
Under the new framework, financial institutions must collect the initial margin before executing a financed transaction and monitor each position's margin coverage daily. If the investor's equity falls below 25% of the position's current market value, the institution must take steps to restore the required coverage.
Saudi Arabia's New Foreign-Market Margin Requirements
Source: CMA announcement
For example, an investor purchasing SAR 100,000 of eligible foreign securities on margin must provide at least SAR 50,000 in personal funds, with the remainder potentially financed by the broker. The 25% maintenance requirement creates an additional safeguard against losses that could otherwise trigger forced liquidations.
Why Leveraged ETFs Face Restrictions
Leveraged ETFs already amplify the daily movements of their underlying benchmarks, commonly targeting two or three times the daily return. Financing these products with borrowed money introduces another layer of leverage, potentially magnifying losses during volatile trading sessions.
The new restrictions cover leveraged ETFs, other leveraged securities, and securities linked to commodities, metals and volatility indices. For example, the Direxion Daily Semiconductor Bull 3X ETF (SOXL) seeks three times the daily performance of its semiconductor benchmark.
An investor using additional broker financing to purchase such a product would face risks arising from both the ETF's embedded leverage and the borrowed capital. The regulatory measures therefore aim to reduce the possibility of excessive leverage and cascading margin liquidations during sharp market declines. Importantly, the restrictions concern margin financing rather than outright ownership. They do not establish a general prohibition on purchasing leveraged ETFs using fully funded cash accounts.
What This Means for GCC ETF Investors
The measures arrive as Saudi investors increasingly access international financial markets.
During the first quarter of 2026, foreign-market securities transactions executed through Saudi capital market institutions reached approximately SAR 264.4 billion, including SAR 241.9 billion in US markets, according to CMA data reported by Arab News. The new framework also requires institutions to assess client suitability before providing foreign-market trading services and obtain explicit, separate written consent for certain securities-lending and order-routing arrangements.
For ETF investors, the distinction between conventional funds, leveraged products and commodity-linked securities becomes increasingly important. The restrictions may affect how investors finance overseas ETF positions through Saudi-regulated intermediaries, but they do not remove access to international ETFs altogether. Saudi Arabia's latest measures reflect an effort to balance expanding global market access with tighter controls on borrowing, product complexity and investor risk.
To learn more about leveraged ETFs, explore Nukoud’s guide to leveraged ETFs, their risks and rewards, or use the leveraged ETF screener to compare and analyze available products.
