Saudi Arabia Eases Entry Rules for Foreign Investors in Stock Market

Saudi Arabia’s reforms are part of Vision 2030, an economic reform plan ‎‎aimed at reducing dependence on oil.

Saudi Arabia’s financial regulator, the Capital Market Authority (CMA), has ‎‎announced new enhancements to its Qualified Foreign Investor (QFI) ‎‎framework. The fresh reforms are intended to ease requirements and entry ‎barriers in an effort to draw more ‎capital into the country’s stock market‏.

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Among the reforms, the minimum value of assets under management ‎needed for an institution to qualify as an investor would fall to $500 million ‎from $1 billion.‎

‎Saudi Arabia has also simplified requirements for qualifying the affiliates of ‎institutional investors, with their subsidiaries and managed funds now could be ‎approved without submitting a separate application for each of them.

The CMA also recognized a wider range of other regulatory jurisdictions as ‎acceptable to Saudi Arabia, the ‎securities regulator said on Tuesday. ‎

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Foreign investors were originally allowed to start investing directly in Saudi ‎Arabia’s stocks market in 2015. The CMA reduced minimum requirements for the ‎institutions in 2016 and is now proposing a fresh round of reforms, as ‎Riyadh seeks to draw more capital into the market before the listing of state ‎oil giant Saudi Aramco.‎

Saudi Arabia’s reforms are part of Vision 2030, an economic reform plan ‎aimed at reducing historical high dependence on oil by diversifying the ‎country’s economy and transforming how the kingdom generates ‎public income.‎

In this context, Saudi officials plan to list around 5 percent of Aramco by ‎the end of 2018 on both the country’s stock market and one or more ‎global venues, with London, New York and Hong Kong in the ‎running.‎

Mohammed ‎ElKuwaiz, Chairman of the CMA, commented: ‎“The goal of these enhancements to the QFI program is to streamline ‎investor qualification and make it part of the account opening process ‎rather than a separate approval process. These changes will broaden access ‎to more financial institutions around the world and further streamline ‎and accelerate the process of investing in the Saudi capital market.”‎

‎ Mr. El-Kuwaiz added: “Capital market reform is the linchpin to unlocking the potential of the ‎Saudi economy and this update to the QFI program is just the latest in ‎series of measures and reforms implemented to expand access, ‎increase efficiency, enhance transparency and strengthen ‎governance.”‎

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