Navigating the desert highway: How SFCM drives market expansion in the Middle East
22 April 2025
Broadridge’s Darren Crowther provides an analysis of the current Middle East market and how the use of securities finance and collateral management is pushing the region forward to economic expansion
Image: stock.adobe.com/MiguelAngel
As the eyes of the world turn to the Middle East, its role as a burgeoning hub of financial growth and innovation is akin to a desert highway leading to a vibrant economic oasis. Crucially, securities finance and collateral management serve as the compass and vehicle for institutions embarking on this journey.
By optimising asset utilisation and enhancing financial stability, securities finance lays the foundation for sustainable development in the region. At Broadridge we believe we are at the forefront of this transformation, as a player in capital markets and asset management solutions, empowering Middle Eastern institutions to navigate the complexities of the market landscape and seize emerging opportunities.
The importance of securities finance in the Middle East
Securities finance is indispensable for fostering liquidity and efficiency in financial markets, much like a strategically mapped route ensures smooth travel through challenging terrain. By enabling institutions to lend and borrow securities, these mechanisms ensure that liquidity circulates efficiently across the economy, propelling investment and growth.
According to recent industry reports, the value of securities on loan in the Middle East has experienced an impressive annual growth rate of over 15 per cent, highlighting their increasing reliance on these mechanisms for market liquidity. This robust growth trajectory resembles a desert highway dotted with accelerative stretches and strategic pitstops essential for reaching the final destination.
Collateral management: A cornerstone for stability
Effective collateral management underpins the risk mitigation, security and reliability of financial transactions, much like ensuring a vehicle is well-maintained for a long road journey. Experts estimate that the collateral market in the Middle East is set to grow by 20 per cent annually in the coming years. This growth underscores the rising importance of securing transactions amid increasing market volatility.
By managing collateral efficiently, financial institutions can mitigate counterparty risk and adhere to stringent regulatory mandates. In the Middle East, where alignment with both regional and global standards is crucial, collateral management provides the traction needed to maintain investor confidence and market stability as institutions traverse the economic highways.
Challenges and opportunities
The financial landscape in the Middle East is dotted with challenges and prospects — regulatory divergence and market fragmentation present significant hurdles that, like unexpected detours, require careful navigation. However, they also open paths for growth through cross-border transactions and emerging markets.
The region’s capital markets are projected to expand by 25 per cent over the next decade, presenting ample opportunities for institutions equipped with comprehensive financial solutions. As regional initiatives aim to harmonise market practices, the call for integrated and adaptable financial solutions becomes more resonant. Traversing this journey, involves navigating through regulatory detours, recalibrating direction with each twist and turn, and ultimately accelerating forward when the path clears.
On the busy road to Riyadh
The Kingdom of Saudi Arabia (KSA) is leading the way on growing and establishing their securities finance marketplace. With this in mind, the industry has started to focus on the KSA processes and understand how participation can increase.
As part of this industry review the ‘Securities Borrowing & Lending (SBL) Guide’ for the Kingdom of Saudi Arabia was published in collaboration with the International Securities Lending Association (ISLA) and Latham & Watkins in 2025. This provided an in-depth examination of the SBL market, legal components, and regulatory environment in Saudi Arabia.
The guide highlights some key points which I have outlined below to both show how the market is adopting international standards while fitting in with what local guidance from the Saudi Securities Depository Center (Edaa).
SBL market overview
• Market organisation: The SBL market operates on an OTC basis facilitated by Edaa, with securities transferred on a free-of-payment basis.
• Participants: Qualified investors, including capital market institutions, funds, banks, and qualified foreign investors (QFIs), can engage in SBL. Non-qualified investors from Saudi and Gulf Cooperation Council (GCC) countries require a lending agent.
• Offshore participation: Offshore QFIs need a local custody member account. They can conduct transactions with adequate reporting methods in place.
• Agency lending: Permitted both onshore and offshore. Onshore agents must be custody members or brokers.
Operational and legal framework
• Collateral requirements: Borrowers, lenders, and agents need appropriate custody arrangements, with collateral maintaining at least 100 per cent coverage.
• Regulatory framework: Governed by Edaa’s regulations and the Saudi exchange’s short selling regulations. Adherence to binding SBL agreements is mandatory, with the Global Master Securities Lending Agreement (GMSLA) usable under modified terms.
• Sharia compliance: Important for Islamic financial institutions, though not mandated for every transaction.
• Licensing and reporting: Borrowers and lenders must be QIs or work with lending agents, with custody members responsible for transaction reporting.
• Netting legislation: KSA lacks comprehensive close-out netting laws for SBLs and derivatives, although SAMA proposed regulations for supervised entities. The Capital Market Authority is anticipated to expand these regulations. The current approach is regulator-specific, reducing enforceability compared to the UAE’s national framework.
How Broadridge can help
Broadridge plays an instrumental role in facilitating Middle Eastern market expansion through its Securities Finance and Collateral Management (SFCM) solutions. Here is how it guides institutions on their financial journey.
1. Integrated technology platforms
Broadridge offers platforms that integrate diverse financial operations, promoting consistency across fragmented markets. This integration is essential for navigating regulatory complexities, much like a reliable GPS that guides travellers through intricate road networks.
2. Advanced risk management
With sophisticated risk management tools, Broadridge aids institutions in safeguarding against market volatility and counterparty risks. Proactive risk assessments enable informed decision-making and enhanced market resilience, akin to anticipating and overcoming the numerous challenges found on a desert highway journey.
3. Regulatory compliance and adaptation
Broadridge’s adaptable frameworks support compliance with evolving local and global regulations. By responding swiftly to regulatory changes, institutions remain aligned with best practices, ensuring they stay on course toward market expansion.
4. Collateral optimisation
Broadridge’s collateral management tools help institutions maximise the potential of their assets, reducing costs and improving capital efficiency. This is comparable to optimising fuel usage for a long road trip, allowing institutions to expand their reach with confidence.
5. Facilitating innovation and growth
Broadridge empowers institutions to innovate through scalable solutions tailored to evolving needs. This adaptability is crucial for accessing emerging markets and supporting long-term growth trajectories, enabling institutions to strategically accelerate through their financial journey.
Final destination, or time to plan the next road trip?
As the Middle East continues to establish itself as a formidable global financial powerhouse, securities finance and collateral management emerge as the essential vehicle and navigational guide on this extensive journey to economic expansion. The region’s financial market size is forecasted to grow significantly, mirroring a vast network of highways opening to new destinations. In this dynamic environment, Broadridge’s SFCM solutions are critical to unlocking the full market potential, offering the expertise and insight necessary to navigate complex challenges and seize burgeoning opportunities.
Broadridge’s solutions empower institutions to manoeuvre through the intricate landscape of financial regulations and opportunities much like an adept driver smoothly navigating a complex series of roadways. These solutions do not simply facilitate growth — they foster the development of a robust, resilient financial ecosystem that serves as the backbone for sustained economic prosperity. By equipping financial institutions with the tools they need to succeed, Broadridge plays a vital role in not only expanding markets but also in shaping a bright economic future for the Middle East.
The journey through this financial transformation parallels the experience of traversing an ever-winding desert highway. Each stretch of road reveals new horizons and vistas, promising rewards for those who dare to travel its length. And just like explorers who reach a long-sought destination only to immediately plan their next adventure, the financial entities in the Middle East are already looking toward future opportunities upon reaching each milestone of success.
Every goal achieved becomes a new starting point, as the pursuit of growth and innovation in the financial sector never truly ends. With Broadridge’s continued guidance and support, institutions are not just prepared to reach their current destinations but are also poised to embark on future journeys.
The path forward holds infinite possibilities, encouraging continuous exploration and expansion in an ever-evolving financial landscape.
This highway of economic opportunity never stops extending, always offering new routes and destinations for those ambitious enough to seek them out, ensuring that the voyage of progress and exploration is perpetual and exhilarating.
By optimising asset utilisation and enhancing financial stability, securities finance lays the foundation for sustainable development in the region. At Broadridge we believe we are at the forefront of this transformation, as a player in capital markets and asset management solutions, empowering Middle Eastern institutions to navigate the complexities of the market landscape and seize emerging opportunities.
The importance of securities finance in the Middle East
Securities finance is indispensable for fostering liquidity and efficiency in financial markets, much like a strategically mapped route ensures smooth travel through challenging terrain. By enabling institutions to lend and borrow securities, these mechanisms ensure that liquidity circulates efficiently across the economy, propelling investment and growth.
According to recent industry reports, the value of securities on loan in the Middle East has experienced an impressive annual growth rate of over 15 per cent, highlighting their increasing reliance on these mechanisms for market liquidity. This robust growth trajectory resembles a desert highway dotted with accelerative stretches and strategic pitstops essential for reaching the final destination.
Collateral management: A cornerstone for stability
Effective collateral management underpins the risk mitigation, security and reliability of financial transactions, much like ensuring a vehicle is well-maintained for a long road journey. Experts estimate that the collateral market in the Middle East is set to grow by 20 per cent annually in the coming years. This growth underscores the rising importance of securing transactions amid increasing market volatility.
By managing collateral efficiently, financial institutions can mitigate counterparty risk and adhere to stringent regulatory mandates. In the Middle East, where alignment with both regional and global standards is crucial, collateral management provides the traction needed to maintain investor confidence and market stability as institutions traverse the economic highways.
Challenges and opportunities
The financial landscape in the Middle East is dotted with challenges and prospects — regulatory divergence and market fragmentation present significant hurdles that, like unexpected detours, require careful navigation. However, they also open paths for growth through cross-border transactions and emerging markets.
The region’s capital markets are projected to expand by 25 per cent over the next decade, presenting ample opportunities for institutions equipped with comprehensive financial solutions. As regional initiatives aim to harmonise market practices, the call for integrated and adaptable financial solutions becomes more resonant. Traversing this journey, involves navigating through regulatory detours, recalibrating direction with each twist and turn, and ultimately accelerating forward when the path clears.
On the busy road to Riyadh
The Kingdom of Saudi Arabia (KSA) is leading the way on growing and establishing their securities finance marketplace. With this in mind, the industry has started to focus on the KSA processes and understand how participation can increase.
As part of this industry review the ‘Securities Borrowing & Lending (SBL) Guide’ for the Kingdom of Saudi Arabia was published in collaboration with the International Securities Lending Association (ISLA) and Latham & Watkins in 2025. This provided an in-depth examination of the SBL market, legal components, and regulatory environment in Saudi Arabia.
The guide highlights some key points which I have outlined below to both show how the market is adopting international standards while fitting in with what local guidance from the Saudi Securities Depository Center (Edaa).
SBL market overview
• Market organisation: The SBL market operates on an OTC basis facilitated by Edaa, with securities transferred on a free-of-payment basis.
• Participants: Qualified investors, including capital market institutions, funds, banks, and qualified foreign investors (QFIs), can engage in SBL. Non-qualified investors from Saudi and Gulf Cooperation Council (GCC) countries require a lending agent.
• Offshore participation: Offshore QFIs need a local custody member account. They can conduct transactions with adequate reporting methods in place.
• Agency lending: Permitted both onshore and offshore. Onshore agents must be custody members or brokers.
Operational and legal framework
• Collateral requirements: Borrowers, lenders, and agents need appropriate custody arrangements, with collateral maintaining at least 100 per cent coverage.
• Regulatory framework: Governed by Edaa’s regulations and the Saudi exchange’s short selling regulations. Adherence to binding SBL agreements is mandatory, with the Global Master Securities Lending Agreement (GMSLA) usable under modified terms.
• Sharia compliance: Important for Islamic financial institutions, though not mandated for every transaction.
• Licensing and reporting: Borrowers and lenders must be QIs or work with lending agents, with custody members responsible for transaction reporting.
• Netting legislation: KSA lacks comprehensive close-out netting laws for SBLs and derivatives, although SAMA proposed regulations for supervised entities. The Capital Market Authority is anticipated to expand these regulations. The current approach is regulator-specific, reducing enforceability compared to the UAE’s national framework.
How Broadridge can help
Broadridge plays an instrumental role in facilitating Middle Eastern market expansion through its Securities Finance and Collateral Management (SFCM) solutions. Here is how it guides institutions on their financial journey.
1. Integrated technology platforms
Broadridge offers platforms that integrate diverse financial operations, promoting consistency across fragmented markets. This integration is essential for navigating regulatory complexities, much like a reliable GPS that guides travellers through intricate road networks.
2. Advanced risk management
With sophisticated risk management tools, Broadridge aids institutions in safeguarding against market volatility and counterparty risks. Proactive risk assessments enable informed decision-making and enhanced market resilience, akin to anticipating and overcoming the numerous challenges found on a desert highway journey.
3. Regulatory compliance and adaptation
Broadridge’s adaptable frameworks support compliance with evolving local and global regulations. By responding swiftly to regulatory changes, institutions remain aligned with best practices, ensuring they stay on course toward market expansion.
4. Collateral optimisation
Broadridge’s collateral management tools help institutions maximise the potential of their assets, reducing costs and improving capital efficiency. This is comparable to optimising fuel usage for a long road trip, allowing institutions to expand their reach with confidence.
5. Facilitating innovation and growth
Broadridge empowers institutions to innovate through scalable solutions tailored to evolving needs. This adaptability is crucial for accessing emerging markets and supporting long-term growth trajectories, enabling institutions to strategically accelerate through their financial journey.
Final destination, or time to plan the next road trip?
As the Middle East continues to establish itself as a formidable global financial powerhouse, securities finance and collateral management emerge as the essential vehicle and navigational guide on this extensive journey to economic expansion. The region’s financial market size is forecasted to grow significantly, mirroring a vast network of highways opening to new destinations. In this dynamic environment, Broadridge’s SFCM solutions are critical to unlocking the full market potential, offering the expertise and insight necessary to navigate complex challenges and seize burgeoning opportunities.
Broadridge’s solutions empower institutions to manoeuvre through the intricate landscape of financial regulations and opportunities much like an adept driver smoothly navigating a complex series of roadways. These solutions do not simply facilitate growth — they foster the development of a robust, resilient financial ecosystem that serves as the backbone for sustained economic prosperity. By equipping financial institutions with the tools they need to succeed, Broadridge plays a vital role in not only expanding markets but also in shaping a bright economic future for the Middle East.
The journey through this financial transformation parallels the experience of traversing an ever-winding desert highway. Each stretch of road reveals new horizons and vistas, promising rewards for those who dare to travel its length. And just like explorers who reach a long-sought destination only to immediately plan their next adventure, the financial entities in the Middle East are already looking toward future opportunities upon reaching each milestone of success.
Every goal achieved becomes a new starting point, as the pursuit of growth and innovation in the financial sector never truly ends. With Broadridge’s continued guidance and support, institutions are not just prepared to reach their current destinations but are also poised to embark on future journeys.
The path forward holds infinite possibilities, encouraging continuous exploration and expansion in an ever-evolving financial landscape.
This highway of economic opportunity never stops extending, always offering new routes and destinations for those ambitious enough to seek them out, ensuring that the voyage of progress and exploration is perpetual and exhilarating.
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