Saudi CMA approves changes to QFI investment rules

Saudi Arabia’s market regulator, the Capital Market Authority (CMA), has approved new amendments to the rules for qualified foreign investors (QFIs) to invest in Tadawul-listed companies.

The minimum value of assets under management by QFIs has been cut to SAR 3.75 billion from SAR 18.75 billion, the CMA said in a statement.

New foreign financial institutions, such as sovereign wealth funds and university endowments, will be allowed to participate in the market.

QFI investment limits have been eliminated. Foreign investors will be allowed to individually own up to 10 percent of Saudi-listed firms.

Foreign investors, whether or not resident, will be allowed to collectiely own a maximum of 49 percent stake in listed companies, unless a company’s regulations has set a lower ownership cap.

The changes are set to come into effect during the first half of 2017.

The CMA has also approved Tadawul’s request for amend the transactions settlement cycle of listed shares to T+2 from the current T+0, starting from H1-2017. 

In addition, the market regulator gave the go-ahead for the introduction of securities lending and covered short-selling, as per the regulations to be issued by the end of H1-2017.

The new measures were aimed at enhancing market stability, by adopting international best practices and incentivizing investors to bolster the local economy.

Saudi Arabia opened Tadawul to direct foreign investment on June 15, 2015.