Saudi Exchange proposes rule changes to expand access to Parallel Market

08/08/2025 02:40 AST

Saudi Arabia's stock exchange has proposed a set of rule changes aimed at broadening investor access to its Parallel Market, in a move that could further stimulate listings and deepen capital market activity.

The Saudi Exchange Co., also known as Tadawul, published draft amendments to its exchange rules for public consultation, inviting feedback until Aug. 19, according to a statement.

The proposed reforms target the definition of "qualified investors," loosen listing requirements for the Parallel Market, known as Nomu, and align existing regulations with updates under the new Companies Law.

The move is part of the exchange's broader strategy to diversify funding channels and boost private sector participation in equity markets, in line with the country's Vision 2030 economic transformation plan.

In a statement, Tadawul stated: "The amendments also include changes to the market value requirement for publicly held shares and the expected aggregate market value requirement as of the listing date for all shares to be listed on the Parallel Market."

It added: "Furthermore, the amendments also aim to align with the Capital Market Authority's Regulations, as amended to implement the new Companies Law."

One of the key proposals includes creating a new classified category within the qualified investor definition for Nomu. The expanded eligibility would allow more institutional and individual investors to participate in the secondary market, which caters primarily to small and medium-sized enterprises.

Under the revised rules, qualified investors in Nomu would include capital market institutions, investment funds, Gulf Cooperation Council companies, qualified foreign financial institutions, and certain high-net-worth individuals.

Notably, the net worth threshold for individuals would remain at SR5 million ($1.33 million), but the minimum securities market activity could be reduced to SR30 million over the past year, down from SR40 million, which would lower the barrier to entry for active investors, the draft amendments document showed.

The exchange has also proposed adjustments to the market capitalization and liquidity criteria for listings on Nomu. The minimum market value of publicly held shares at the time of listing could be reduced to SR30 million or 20 percent of the share class - whichever is less - while the minimum expected aggregate market value of all listed shares may be set at SR10 million for initial public offerings and SR100 million for direct listings, the document noted.

The new rules also allow for lower thresholds to be approved by the Capital Market Authority if a company demonstrates sufficient investor demand and share liquidity.

The proposed amendments aim to harmonize Tadawul's rulebook with regulatory changes introduced under the updated Companies Law, particularly those related to corporate restructurings and listings following demergers or spin-offs.

Definitions of terms such as "Demerger," "Spin-Off," and "Qualified Investor" have been revised to reflect these changes.

The Saudi Exchange has opened a 14-day public consultation window, during which stakeholders can submit their feedback to the draft proposals via email. Final rule changes will be issued after review and approval by the CMA, the release added.

The reforms come as Saudi Arabia continues to see a steady flow of listings on both the main market and Nomu, driven by favorable macroeconomic conditions and the government's drive to deepen its capital markets.

Saudi Arabia accounted for 31 percent of the region's total initial public offering proceeds in 2024, making it the second-largest contributor after the UAE. The Saudi Exchange hosted 14 IPOs on its main market, raising a total of $3.8 billion. Its parallel market saw 28 IPOs that collectively raised $297 million.