Saudi to set bourse opening rules by Jan. 15

30/12/2011 08:18 AST

Saudi Arabia is pressing ahead with a long-awaited plan to open up its stock market to foreigners and is now hoping to formalize its rules by January 15, a source with knowledge of the matter told Reuters.

"The dialogue is clearly intensifying, and they are looking at mid-January for publishing the term sheet for access," said the source, who declined to be identified.

The country has been considering a wider opening of its market for several years and, earlier this month, two industry sources revealed that it planned to offer a limited direct foreign ownership. At the time, sources expected this to happen by mid to late first quarter (Q1) of 2012.

The opening up of the stock market is likely to attract considerable interest as it offers foreigners a chance to invest directly in blue chips like Saudi Basic Industries (SABIC), the world's most valuable chemical company. Other big players in the exchange include Samba Financial, the country's second-largest lender by market value, and former monopoly Saudi Telecom.

Foreign investors currently are allowed to invest in Saudi Arabian companies only by share swap transactions via international investment banks, who deal with local partners.

"We expect costs for trading to come down by 70-80 basis points if we're allowed direct access," said the source, who expected implementation of the guidelines to follow in the first or second quarter of the year.

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