Saudi Arabia is moving to open its main market directly to foreign non-residents under draft rules (pdf) posted by the Capital Market Authority (CMA) on Istitlaa. The proposed changes, open for feedback until 31 October, dismantle the Qualified Foreign Investor (QFI) framework and end the swap agreements restriction, with the aim of broadening the investor base, attracting additional foreign investment, and increasing market liquidity.

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Expanded investor access: The changes would open the door for all foreign individuals and institutions, resident or non-resident, to invest directly in all listed securities for the first time. Foreigners are currently limited to investing in listed securities, debt instruments and investment funds.

No more QFI: To allow direct market access, the draft proposes repealing all provisions governing QFI participation in the main market and its associated requirements, including the minimum of SAR 1.9 bn (USD 500 mn) in assets under management. It would also eliminate rules requiring most foreign investors to access Saudi equities through swap agreements.

There are some 4.5k QFIs registered on the Saudi Exchange, per Semafor ’s tally. The amendments are set to allow foreign investors from all around the world to start investing in TASI with little red tape, attracting more foreign capital needed to shore up the increasing pipeline of IPOs on the main market.

Ownership limits remain in place: A single non-resident foreign investor (excluding strategic investors) still cannot hold 10% or more of a listed company’s shares. Combined foreign ownership (resident and non-resident, excluding strategic investors) is limited to 49% of a listed issuer.

BUT- That could change in a few months: Adjustments to ease foreign ownership caps are expected “before the end of the year,” CMA’s board member Abdulaziz Abdulmohsen Binhassan told Bloomberg last month, sending TASI into its sharpest one-day rally since 2020 on the following day. The size of the stake foreigners will be allowed to own was not specified, and the decision will still need approval from other government entities.

The market is already pricing in the prospect of fresh demand, with analysts estimating that a full removal of the cap could unlock some USD 10 bn of passive inflows. The reform could channel foreign demand into sectors such as real estate, mining, and data center operators tied to the Kingdom’s AI agenda, CI Capital KSA CEO Fahd Al Tarzi told us.

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