Saudi Arabia's Capital Market Authority is considering a hard-underwriting setup in which banks would have to purchase any IPO stock left on the table by investors. People familiar with the talks say that could leave lenders exposed to the full size of an offering. The draft also calls for IPO bids to be backed by cash that investors actually have and for companies to provide projections and other forward-looking financial details. Listed firms would be required to host two earnings calls annually.
Some lenders say the all-in underwriting exposure conflicts with limits on how much equity they can hold. While banks broadly like parts of the plan, several worry the current draft could narrow how many firms can take part in Saudi IPOs. According to people involved, multiple banks, including global players active on Saudi deals, are sending their views to the regulator ahead of the Oct. 22 deadline.
In theory that extra risk should translate into lower offer prices for investors, he noted, but in practice issuers and banks often resist pricing that leaves too much upside. Analysts say the measures could still clean up order books and help pricing after months of warnings about stretched valuations and inflated demand. One person said large domestic banks may be more comfortable with stricter underwriting than smaller local or international rivals.
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After a slump that started last year and deepened with a regional war, Saudi Arabia's IPO pipeline has hit its softest patch in years. Despite a strong roster of would-be issuers, the regulator has not greenlit fresh listings on the main market since April. The benchmark is roughly unchanged year to date and has held up better than some Middle East peers, but it was among the world's laggards in 2025, prompting some locals to shift money into US equities.
Al Sudairi said the authority has a 90-day action plan to launch reforms after reviewing recent market performance, clarifying that the three-month window is about starting changes, not necessarily completing them. The CMA did not reply to a request for comment. Some people involved expect a back-and-forth with banks that ends in a compromise.
Investors were already bracing for change after Al Sudairi took the helm in August, expecting more liberalization, fresh liquidity initiatives, and steps to draw in foreign capital. He said talks are underway with institutions on long-awaited tweaks to foreign ownership limits. Morgan Stanley analysts estimate that removing the current 49% ceiling on overseas stakes in Saudi companies could pull about $7.4 billion into the market.
The CMA also plans to tighten reporting, require two earnings calls per year, and curb overseas leveraged trading through a proposed 50% initial margin, which SICO Bank's research head Chiro Ghosh says would put Saudi practices broadly in line with other major markets. Al Sudairi added that the authority will not try to curb Saudis' investments abroad, focusing instead on making the home market more compelling. He also defended allocating 30% of IPO shares to retail buyers, a level banks argue is too high given softer demand from that group.
If these rules land close to the current outline, IPO risk shifts more toward banks, while investors get firmer cash backing on orders and more visibility into companies' outlooks. The 50% margin proposal would make leveraged trading abroad pricier, and any move on the 49% foreign cap could change capital flows in and out of Riyadh. Keep an eye on how the draft evolves after Oct. 22 and into early November, because the final shape will influence whether new listings reaccelerate or keep grinding along.
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