Every equity lending market that has reached institutional scale has followed a similar path: international capital arriving first, proving the market worked, and acting as a signal to domestic participation.

Saudi is no different, and the lendable-inventory data shows supply arriving in large, discrete tranches, consistent with institutional supply sources being activated in sequence. That supply covers the market’s large cap securities but leaves a significant portion of the listed universe inaccessible to borrowers. Domestic institutions hold a broader and more diversified breadth of securities, outside the reach of international holders, thereby creating a highly attractive borrowable supply.

Average loan fees remain elevated, approximately 337bps, reflecting an early-stage market where genuine scarcity for in-demand names still commands a significant premium. Fee compression will occur as liquidity deepens, but the timing and pace will depend on the supply-side, not demand.

The sequence, then, is not international supply versus domestic supply — it is international supply as the precondition for domestic supply. The data shows Saudi Arabia firmly in the transition between the two. There has been a number of domestic participants, building out their securities finance infrastructure — either directly or through agent lenders – which has materially changed the number of securities available in lending.