Securities lending in the Middle East: From emergence to expansion
May 2026
Matt Chessum of S&P Global Market Intelligence explores the growth and performance of the Middle East as a multi-speed region, with Saudi leading the way
Image: vizual/stock/adobe
Not long ago, securities lending in the Middle East, especially across the Gulf Cooperation Council (GCC), was more ‘concept’ than market. Activity was sporadic, frameworks were still being tested, and many global securities finance desks treated the region as operationally complex and economically marginal.
That picture is changing quickly. Today, securities lending is becoming part of the region’s capital markets plumbing: a mechanism that supports liquidity, short selling, price discovery, and, crucially for asset owners, portfolio revenue.
The shift is easiest to see in Saudi Arabia, where the securities borrowing and lending (SBL) market has scaled from near-zero into a measurable on-loan ecosystem in just a few years. But Saudi is not alone. Reforms and market-structure upgrades across the United Arab Emirates (UAE), Qatar, and Kuwait are laying the groundwork for broader regional participation.
The Middle East is still small relative to global securities lending in absolute size, yet it is increasingly meaningful because of its growth rate, spreads, and rising index importance, a combination that tends to pull in both borrowers and lenders once investment structures are scaled.
A young market scaling from a low base, fast
To understand why the Middle East’s trajectory matters, it helps to anchor it against global context. The global securities lending industry is often described in two headline numbers: the total lendable inventory and the amount actually on loan on a typical day. That baseline is about US$51 trillion in lendable assets worldwide, with approximately US$3.7 trillion on loan on any given day. In other words, even globally, only a slice of available assets is continuously utilised, because utilisation depends on borrower demand, specialness, liquidity, and the ability to intermediate efficiently.
Against that scale, Middle Eastern markets are still emerging. But that is exactly the point: when a market starts from a low base, institutional adoption curves can look dramatic once the rules, incentives, and operational pathways become stable. That is now happening, most clearly in Saudi Arabia.
Saudi Arabia: The region’s securities
lending leader
Saudi Arabia is the standout case because it combines three elements that securities lending markets need to ‘ignite’:
A large, liquid underlying cash equity market with broad investor interest.
Regulatory and exchange support for SBL and related activities like short selling.
Growing foreign participation and benchmark relevance, which creates natural hedging and relative-value demand.
This shows how quickly the ecosystem has matured. Saudi equities, show US$18.5 billion in lendable equity inventory, around US$1.33 billion on loan, and 152 securities actively lent, as of 5 March 2026. More strikingly, by late 2024, the on-loan balance had reached US$550–600 million, spanning positions in more than half of listed companies, up from near-zero only a year earlier.
That last detail matters more than it might seem. Early in a market’s development, securities lending often concentrates on a small set of large-cap names. When lending begins to touch half the listed universe, it signals that the market is no longer ‘event-driven only’ (e.g. a few high-profile specials). It is becoming systemic, embedded in the day-to-day toolkit of trading desks, market makers, and hedgers.
And because SBL in Saudi Arabia was only formally introduced in 2020, the speed is notable. Mature markets took decades to develop deep lending pools, consistent utilisation, and standardised workflows. Saudi is compressing that timeline by adopting modern market structure from the outset and iterating quickly.
Regulation: Growth that has been designed, not just discovered
Securities lending does not scale on goodwill. It scales on rules: enforceable documentation, clean settlement mechanics, collateral standards, default management protocols, and clarity on what can be borrowed, by whom, and how. The Middle East’s recent progress reflects a broader reality: the region’s capital market reforms are not accidental; they are part of national strategies to deepen financial markets and diversify economies.
Saudi Arabia’s approach has involved coordinated work between regulators, the exchange, and market participants, including:
Clearer operational and collateral frameworks
Improved settlement and custody processes
Incremental expansion of eligible securities
Alignment with international best practices
This ‘engineered’ development is one reason Gulf markets can leapfrog. Instead of inheriting fragmented legacy structures, they can implement frameworks modelled on what has worked in North America and Europe, then tailor them to local settlement conventions, ownership limits, and investor composition.
Across the GCC more broadly, reform is often tied to the same strategic objective: make domestic markets deeper, more investable, and more liquid. Securities lending supports that objective because it enables short selling, enhances market making, and improves two-way pricing, especially important in markets where long-only flows historically dominated.
Diversification agendas create structural demand for securities finance
Securities lending thrives when markets offer more instruments, more participants, and more reasons to hedge. The Gulf’s macro direction is pushing exactly that. Saudi Arabia, the UAE, Qatar, and Kuwait are all working at different speeds and with different structures, toward less oil-dependent growth models, with capital markets playing a larger role.
In practical terms, that means more of the ingredients that create durable securities borrowing demand:
IPO pipelines that broaden the equity investable universe.
Growing sovereign and corporate debt programmes that expand fixed income collateral sets.
Higher foreign investor participation, increasing the need for hedging and financing tools.
More active trading strategies, arbitrage, relative value, and volatility-driven positioning, once instruments and liquidity support them.
This is the structural part of the story. Securities lending is not just a ‘nice-to-have yield enhancer’ — it becomes the infrastructure that allows markets to behave like modern markets: with tighter spreads, better price formation, and tools for both risk transfer and liquidity provision.
Beyond equities: Signs of a multi-asset lending market
One of the most important indicators of maturity is whether lending extends beyond cash equities. In mature financial centres, a significant share of securities finance activity is intertwined with fixed income through repo, collateral transformation, and balance-sheet optimisation.
With meaningful lendable pools in fixed income, even if the utilisation of those pools is still developing, the existence of sizable lendable inventory is a milestone. It suggests the region is laying foundations not just for equity specials, but for a broader ecosystem where collateral management, benchmark hedging, and secondary-market liquidity in bonds can all improve.
For governments funding long-term infrastructure and diversification projects, this matters. Deep, tradable sovereign curves rely on active secondary markets. Securities lending and repo activity can support that by enabling:
Arbitrage and curve trades (which tighten pricing)
More reliable market making (two-way liquidity)
Better benchmark efficiency (pricing confidence for issuers and investors)
In short: moving from equity-only lending to a multi-asset landscape is not cosmetic, it is a structural inflection point.
Spreads and revenue: Early-stage markets can be exceptionally attractive
Securities lending is ultimately a marketplace, and the ‘price’ is the borrowing fee (or spread). Early-stage markets frequently display high fees because supply is still developing, borrow demand can be concentrated, and inventory discovery is less efficient.
Saudi Arabia is showing exactly that: many securities are trading at borrowing spreads averaging 468 basis points, with some reaching 900bps or more. Those are meaningful numbers for asset owners. A long-only institution holding Saudi equities can potentially generate real incremental return through lending, especially when spreads spike around corporate actions, index events, or concentrated short interest.
The appeal is two-sided:
Lenders (asset owners, asset managers) can enhance returns on existing portfolios.
Borrowers (hedge funds, market makers, prime brokerage clients) gain the ability to hedge exposures, run relative-value trades, and manage benchmark risk in a market that is increasingly included in emerging market allocations.
High spreads rarely persist forever. As markets mature, more lenders come in, utilisation becomes more efficient, and pricing compresses, especially in the most liquid names. That is why the current period is strategically important: it can be the window where early movers build relationships, operational comfort, and consistent revenue before the market becomes more ‘normalised’.
Data infrastructure: The missing link that is starting to appear
If regulation is the legal foundation, data transparency is the trust layer. Global securities lending activity depends heavily on data: participants need to see utilisation, fee levels, inventory availability, and settlement reliability to price risk and allocate balance sheet.
Historically, one reason Middle Eastern securities lending lagged was opacity, limited standardised reporting, fewer widely distributed benchmarks, and uncertainty about the completeness of activity capture. This is improving at great pace, with better reporting standards, greater transaction visibility, and stronger data aggregation enabling participants to:
Track utilisation rates
Compare fees more consistently
Evaluate counterparty exposure
Integrate GCC activity into global lending programmes
At the same time, the modernisation is uneven. Some markets still have reporting gaps that limit comparability with the most established markets. That unevenness is typical in developing ecosystems, but the direction matters: better data creates a virtuous cycle, because transparency lowers operational hesitation, which increases participation, which further improves price discovery and benchmark quality.
The GCC is not one market: A multi-speed region
It is tempting to talk about the Middle East as a single securities lending story, but in practice the region is multi-speed. Saudi Arabia is leading in visible scale and momentum. Elsewhere, activity is more selective and shaped by market-specific constraints: liquidity profiles, foreign ownership limits, settlement practices, and how corporate actions are handled.
Qatar serves as an instructive example, noting that changes around dividend taxation and interim dividends can influence borrowing demand around corporate actions. That kind of local-market detail is precisely what securities lending desks focus on, because corporate actions, tax treatment, and settlement timing can turn an otherwise ordinary security into a high-fee special, briefly, but materially.
For the UAE, Qatar, and Kuwait, the opportunity is real, but the path may look different. Some markets may develop first through a handful of liquid names and event-driven borrow, then broaden as market making grows and data improves. Others may see faster expansion in fixed income as debt programmes deepen.
The common theme is that harmonisation is incomplete, yet early movers can still capture meaningful advantage where supply and demand are imbalanced.
What to watch next: The metrics that signal institutionalisation
If the Middle East is moving from ‘frontier feature’ to ‘core market infrastructure’, the next 24–36 months should reveal it in measurable ways. The most useful indicators are not just bigger on-loan balances, but signs of structural depth:
Rising utilisation toward levels seen in mature markets.
Broader eligibility lists, especially in fixed income.
Greater foreign lender participation, potentially including large state-linked pools.
More standardised reporting across GCC venues.
Tighter integration with global collateral, margin, and custody workflows.
If these pieces progress together, the region will become easier to trade, easier to hedge, and easier to finance, precisely the conditions that pull securities lending into the mainstream of capital market activity.
Conclusion: From frontier to functional and increasingly investable
Securities lending in the Middle East is no longer just a ‘future potential’ story. The data points to a market already crossing important thresholds: Saudi Arabia reaching billions of dollars on loan, lending activity across a wide portion of listed equities, and a lendable fixed income pool exceeding US$20 billion. Add to that the presence of elevated borrowing spreads, and the near-term revenue opportunity is clear for lenders, while borrowers gain essential tools to manage risk in markets that matter more each year.
The region remains small next to global securities lending, but the strategic question has changed. It is no longer whether the Middle East will play a role in securities finance; it is how quickly Saudi Arabia and its GCC peers turn rapid early growth into a deep, institutionalised, multi-asset markets.
That picture is changing quickly. Today, securities lending is becoming part of the region’s capital markets plumbing: a mechanism that supports liquidity, short selling, price discovery, and, crucially for asset owners, portfolio revenue.
The shift is easiest to see in Saudi Arabia, where the securities borrowing and lending (SBL) market has scaled from near-zero into a measurable on-loan ecosystem in just a few years. But Saudi is not alone. Reforms and market-structure upgrades across the United Arab Emirates (UAE), Qatar, and Kuwait are laying the groundwork for broader regional participation.
The Middle East is still small relative to global securities lending in absolute size, yet it is increasingly meaningful because of its growth rate, spreads, and rising index importance, a combination that tends to pull in both borrowers and lenders once investment structures are scaled.
A young market scaling from a low base, fast
To understand why the Middle East’s trajectory matters, it helps to anchor it against global context. The global securities lending industry is often described in two headline numbers: the total lendable inventory and the amount actually on loan on a typical day. That baseline is about US$51 trillion in lendable assets worldwide, with approximately US$3.7 trillion on loan on any given day. In other words, even globally, only a slice of available assets is continuously utilised, because utilisation depends on borrower demand, specialness, liquidity, and the ability to intermediate efficiently.
Against that scale, Middle Eastern markets are still emerging. But that is exactly the point: when a market starts from a low base, institutional adoption curves can look dramatic once the rules, incentives, and operational pathways become stable. That is now happening, most clearly in Saudi Arabia.
Saudi Arabia: The region’s securities
lending leader
Saudi Arabia is the standout case because it combines three elements that securities lending markets need to ‘ignite’:
A large, liquid underlying cash equity market with broad investor interest.
Regulatory and exchange support for SBL and related activities like short selling.
Growing foreign participation and benchmark relevance, which creates natural hedging and relative-value demand.
This shows how quickly the ecosystem has matured. Saudi equities, show US$18.5 billion in lendable equity inventory, around US$1.33 billion on loan, and 152 securities actively lent, as of 5 March 2026. More strikingly, by late 2024, the on-loan balance had reached US$550–600 million, spanning positions in more than half of listed companies, up from near-zero only a year earlier.
That last detail matters more than it might seem. Early in a market’s development, securities lending often concentrates on a small set of large-cap names. When lending begins to touch half the listed universe, it signals that the market is no longer ‘event-driven only’ (e.g. a few high-profile specials). It is becoming systemic, embedded in the day-to-day toolkit of trading desks, market makers, and hedgers.
And because SBL in Saudi Arabia was only formally introduced in 2020, the speed is notable. Mature markets took decades to develop deep lending pools, consistent utilisation, and standardised workflows. Saudi is compressing that timeline by adopting modern market structure from the outset and iterating quickly.
Regulation: Growth that has been designed, not just discovered
Securities lending does not scale on goodwill. It scales on rules: enforceable documentation, clean settlement mechanics, collateral standards, default management protocols, and clarity on what can be borrowed, by whom, and how. The Middle East’s recent progress reflects a broader reality: the region’s capital market reforms are not accidental; they are part of national strategies to deepen financial markets and diversify economies.
Saudi Arabia’s approach has involved coordinated work between regulators, the exchange, and market participants, including:
Clearer operational and collateral frameworks
Improved settlement and custody processes
Incremental expansion of eligible securities
Alignment with international best practices
This ‘engineered’ development is one reason Gulf markets can leapfrog. Instead of inheriting fragmented legacy structures, they can implement frameworks modelled on what has worked in North America and Europe, then tailor them to local settlement conventions, ownership limits, and investor composition.
Across the GCC more broadly, reform is often tied to the same strategic objective: make domestic markets deeper, more investable, and more liquid. Securities lending supports that objective because it enables short selling, enhances market making, and improves two-way pricing, especially important in markets where long-only flows historically dominated.
Diversification agendas create structural demand for securities finance
Securities lending thrives when markets offer more instruments, more participants, and more reasons to hedge. The Gulf’s macro direction is pushing exactly that. Saudi Arabia, the UAE, Qatar, and Kuwait are all working at different speeds and with different structures, toward less oil-dependent growth models, with capital markets playing a larger role.
In practical terms, that means more of the ingredients that create durable securities borrowing demand:
IPO pipelines that broaden the equity investable universe.
Growing sovereign and corporate debt programmes that expand fixed income collateral sets.
Higher foreign investor participation, increasing the need for hedging and financing tools.
More active trading strategies, arbitrage, relative value, and volatility-driven positioning, once instruments and liquidity support them.
This is the structural part of the story. Securities lending is not just a ‘nice-to-have yield enhancer’ — it becomes the infrastructure that allows markets to behave like modern markets: with tighter spreads, better price formation, and tools for both risk transfer and liquidity provision.
Beyond equities: Signs of a multi-asset lending market
One of the most important indicators of maturity is whether lending extends beyond cash equities. In mature financial centres, a significant share of securities finance activity is intertwined with fixed income through repo, collateral transformation, and balance-sheet optimisation.
With meaningful lendable pools in fixed income, even if the utilisation of those pools is still developing, the existence of sizable lendable inventory is a milestone. It suggests the region is laying foundations not just for equity specials, but for a broader ecosystem where collateral management, benchmark hedging, and secondary-market liquidity in bonds can all improve.
For governments funding long-term infrastructure and diversification projects, this matters. Deep, tradable sovereign curves rely on active secondary markets. Securities lending and repo activity can support that by enabling:
Arbitrage and curve trades (which tighten pricing)
More reliable market making (two-way liquidity)
Better benchmark efficiency (pricing confidence for issuers and investors)
In short: moving from equity-only lending to a multi-asset landscape is not cosmetic, it is a structural inflection point.
Spreads and revenue: Early-stage markets can be exceptionally attractive
Securities lending is ultimately a marketplace, and the ‘price’ is the borrowing fee (or spread). Early-stage markets frequently display high fees because supply is still developing, borrow demand can be concentrated, and inventory discovery is less efficient.
Saudi Arabia is showing exactly that: many securities are trading at borrowing spreads averaging 468 basis points, with some reaching 900bps or more. Those are meaningful numbers for asset owners. A long-only institution holding Saudi equities can potentially generate real incremental return through lending, especially when spreads spike around corporate actions, index events, or concentrated short interest.
The appeal is two-sided:
Lenders (asset owners, asset managers) can enhance returns on existing portfolios.
Borrowers (hedge funds, market makers, prime brokerage clients) gain the ability to hedge exposures, run relative-value trades, and manage benchmark risk in a market that is increasingly included in emerging market allocations.
High spreads rarely persist forever. As markets mature, more lenders come in, utilisation becomes more efficient, and pricing compresses, especially in the most liquid names. That is why the current period is strategically important: it can be the window where early movers build relationships, operational comfort, and consistent revenue before the market becomes more ‘normalised’.
Data infrastructure: The missing link that is starting to appear
If regulation is the legal foundation, data transparency is the trust layer. Global securities lending activity depends heavily on data: participants need to see utilisation, fee levels, inventory availability, and settlement reliability to price risk and allocate balance sheet.
Historically, one reason Middle Eastern securities lending lagged was opacity, limited standardised reporting, fewer widely distributed benchmarks, and uncertainty about the completeness of activity capture. This is improving at great pace, with better reporting standards, greater transaction visibility, and stronger data aggregation enabling participants to:
Track utilisation rates
Compare fees more consistently
Evaluate counterparty exposure
Integrate GCC activity into global lending programmes
At the same time, the modernisation is uneven. Some markets still have reporting gaps that limit comparability with the most established markets. That unevenness is typical in developing ecosystems, but the direction matters: better data creates a virtuous cycle, because transparency lowers operational hesitation, which increases participation, which further improves price discovery and benchmark quality.
The GCC is not one market: A multi-speed region
It is tempting to talk about the Middle East as a single securities lending story, but in practice the region is multi-speed. Saudi Arabia is leading in visible scale and momentum. Elsewhere, activity is more selective and shaped by market-specific constraints: liquidity profiles, foreign ownership limits, settlement practices, and how corporate actions are handled.
Qatar serves as an instructive example, noting that changes around dividend taxation and interim dividends can influence borrowing demand around corporate actions. That kind of local-market detail is precisely what securities lending desks focus on, because corporate actions, tax treatment, and settlement timing can turn an otherwise ordinary security into a high-fee special, briefly, but materially.
For the UAE, Qatar, and Kuwait, the opportunity is real, but the path may look different. Some markets may develop first through a handful of liquid names and event-driven borrow, then broaden as market making grows and data improves. Others may see faster expansion in fixed income as debt programmes deepen.
The common theme is that harmonisation is incomplete, yet early movers can still capture meaningful advantage where supply and demand are imbalanced.
What to watch next: The metrics that signal institutionalisation
If the Middle East is moving from ‘frontier feature’ to ‘core market infrastructure’, the next 24–36 months should reveal it in measurable ways. The most useful indicators are not just bigger on-loan balances, but signs of structural depth:
Rising utilisation toward levels seen in mature markets.
Broader eligibility lists, especially in fixed income.
Greater foreign lender participation, potentially including large state-linked pools.
More standardised reporting across GCC venues.
Tighter integration with global collateral, margin, and custody workflows.
If these pieces progress together, the region will become easier to trade, easier to hedge, and easier to finance, precisely the conditions that pull securities lending into the mainstream of capital market activity.
Conclusion: From frontier to functional and increasingly investable
Securities lending in the Middle East is no longer just a ‘future potential’ story. The data points to a market already crossing important thresholds: Saudi Arabia reaching billions of dollars on loan, lending activity across a wide portion of listed equities, and a lendable fixed income pool exceeding US$20 billion. Add to that the presence of elevated borrowing spreads, and the near-term revenue opportunity is clear for lenders, while borrowers gain essential tools to manage risk in markets that matter more each year.
The region remains small next to global securities lending, but the strategic question has changed. It is no longer whether the Middle East will play a role in securities finance; it is how quickly Saudi Arabia and its GCC peers turn rapid early growth into a deep, institutionalised, multi-asset markets.
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