CMA to reduce foreign investment restrictions by the end of year

01/08/2016 05:15 AST

Capital Market Authority (CMA) Chairman Mohammed Aljadaan has indicated the possibility of introducing measures and controls to reduce restrictions on foreign investments in the stock market before the end of the current year, or by mid-next year at the latest.

In an interview with The Wall Street Journal recently, Aljadaan said the new rules will likely be announced by the end of September, after the public consultation on the proposed changes came to an end last week. Rules include reducing the minimum value of assets that foreign companies are required to manage in order to qualify for investment in the stock market in the Kingdom, as well as shift from same-day trading to a two-day training system.

According to statistics, the share of foreign investors in the market is currently around SR1.6 trillion, or about only 1 percent. The amendments aim to keep up needs of foreign investors and global markets in line with the Kingdom’s efforts to join the index of emerging markets by mid next year.

Weeks ago, the CMA agreed to amend the registration of foreign financial institutions and qualifying conditions, and adjust the length of time for the settlement of securities transactions from T+0 to T+2.

The authority also agreed to activate securities lending and lower the required value of assets of foreign institutions to be eligible to invest in the Saudi stock market (Tadawul) from $5 billion to $1 million.

The authority also agreed to increase the categories of foreign financial institutions eligible to invest to include government funds and university endowments that agree to register with the authority.

Qualified foreign institutions will be permitted to own larger shares provided they are not up to 10 percent of the shares of any source for the individual investor. Foreign investors, including residents and non-residents, will still not be able to own more than 49 percent of the shares of any source listed on the market.

Arab News