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.
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.
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.”