Article 56: Money Market Fund

Article 56: Money Market Fund

a. A money market fund manager must invest the fund's assets and money only in the following types of investments:

1) Money market transactions concluded with a party regulated by the Saudi Central Bank or an equivalent regulator to the Saudi Central Bank in a jurisdiction outside the Kingdom.

2) Debt instruments.

3) Derivatives.

4) Bank deposits with institutions regulated by the Saudi Central Bank or equivalent regulator to the Saudi Central Bank in a jurisdiction outside the Kingdom.

5) Units of public money market funds with a similar strategy.

6) Units of public debt instruments funds with fixed income.

b. A money market fund may not invest in derivatives contracts except for the purposes of hedging, and the value of such investment must not exceed (5%) of the fund's net assets value and the issuer entity of these contracts should be subject to prudential rules issued by an equivalent regulator to the Authority.

c. The value of a money market fund investments in securitisation must not exceed (10%) of the fund’s net assets value.

d. The value of a money market fund investments in debt instruments issued by a single issuer must not exceed (10%) of the fund’s net asset value, and in all cases, the total money market fund investments with or in a single counterparty may not exceed (25%) of the fund’s net asset value.

e. With regards to Paragraph (a) of this Article, the investments of a money market fund with or in parties belonging to the same group, may not exceed (25%) of the fund’s net assets. This includes all investments in money market transactions concluded with different parties belonging to the same group, securities issued by different parties belonging to the same group, and bank deposits with different parties belonging to the same group.

f. Units of investment funds are excluded from the provisions of Paragraph (e) of this Article, provided that the total money market fund investments in units of another investment fund, or in different investment fund units issued by the same capital market institution, shall not exceed (25%) of the net asset value of the fund.

g.Debt instruments issued by the Kingdom’s government are excluded from the provisions of Paragraphs (c), (d) and (e) of this Article.

h. Money market fund must have a foreseen average of the date of Weighted Average Life (WAL) not exceeding (180) calendar days.

i. A money market fund manager must ensure, at all times, that it has liquidity equalling to at least (10%) of the fund’s net assets value or that it has investments that have a maturity, or a remaining maturity, period not more than (7) days.

j. A money market fund manager must carry out a Stress Testing at least twice a year to detect risks related to the fund and ensure treatment of these risks as soon as possible.