Foreign investor rule changes for Saudi stock market out for consultation

03/10/2025 01:21 AST

Foreign investors may soon be able to buy Saudi stocks without restrictions, under a draft plan aimed at boosting liquidity and expanding the Kingdom's $3 trillion equity market.

The proposal, now out for a 30-day consultation, would allow all categories of non-resident investors to purchase shares directly on the Tadawul Main Market.

It would dismantle the Qualified Foreign Investor framework and scrap swap agreements, long seen as barriers to international participation, according to an official release.

Gulf markets such as Dubai, Abu Dhabi, and Qatar, as well as Kuwait, Bahrain, and Oman, already allow foreign investors to buy shares directly, boosting liquidity, attracting global capital, and modernizing their exchanges.

Foreign ownership in Saudi equities has already climbed sharply, exceeding SR528 billion ($141 billion) by the second quarter of 2025, Capital Market Authority data shows. If approved, the changes would mark the most significant market opening since direct foreign access was first introduced in 2015.

"The draft aims to broaden and diversify the base of investors eligible to participate in the Main Market, while also attracting additional investments and increasing market liquidity," the CMA said.

The consultation runs until Oct. 31, with final rules to follow after feedback is reviewed.

Once approved, foreign investors would be able to purchase shares in listed companies on the main market directly, without going through these extra layers. Non-resident investors would be able to open accounts and invest directly in listed securities.

Saudi Arabia's move fits into a broader program of capital-market modernization aimed at boosting liquidity and global participation.

In July, the CMA eased rules for foreign investors to open accounts, while amendments to investment fund regulations aligned the market more closely with global standards.

The latest draft follows a late-September policy signal that fueled a rally in Saudi equities and comes as officials weigh lifting the long-standing 49 percent cap on foreign ownership.

The CMA pointed to strong growth in overseas participation as a foundation for the change.

The regulator framed the draft as part of a phased approach to position Riyadh as an international marketplace capable of attracting larger, more diverse flows of foreign capital.

The initiative, it said, is intended to strengthen confidence among market participants and support the broader local economy.

Stakeholders can submit comments through the Unified Electronic Platform for Consulting the Public and Government Entities or via a prescribed email form. The CMA said it will review all relevant submissions before finalizing the amendments.