Saudi Capital Market Authority expands access of foreign investors to Main Market

Saudi Arabia’s Capital Market Authority (CMA) recently made significant changes to its regulatory framework governing foreign investment in securities listed on the Main Market of the Saudi Exchange (Tadawul). These amendments, announced on January 6, 2026, aim to boost foreign investor participation in the Saudi capital markets, increase market liquidity, and make the Main Market more appealing to international investors.

Effective February 1, 2026, foreign investors can now directly invest in shares listed on the Main Market without needing to meet specific investor category requirements. The Qualified Foreign Investor (QFI) framework has been eliminated, streamlining the investment process for international institutions and other foreign investors. These changes mark a departure from previous restrictions that mandated foreign institutional investors to qualify as QFIs to access Saudi-listed equities.

The newly amended framework also does away with the regulatory framework governing equity swap arrangements, which some foreign investors previously relied on to gain economic exposure to Saudi-listed shares when direct access was not feasible. This shift towards direct participation in the Main Market promises to enhance transparency, governance, and market liquidity.

While the reforms broaden foreign investor access, they maintain the existing foreign ownership limits for listed companies. Non-resident foreign investors (excluding foreign strategic investors) are still prohibited from owning 10% or more of a listed issuer’s shares or convertible debt instruments. Additionally, the aggregate ownership of foreign investors (excluding foreign strategic investors) cannot exceed 49% of the shares or convertible debt instruments of a listed issuer.

The implications of these changes are significant. The amendments simplify the process for international investors to access the Main Market by reducing structural and procedural barriers. This is expected to encourage greater participation from international institutional investors who would have previously had to navigate stringent QFI requirements. Furthermore, it opens up opportunities for foreign individual investors, including foreign employees of Saudi companies participating in incentive schemes, to invest directly in Main Market securities.

By promoting direct ownership by foreign investors and eliminating synthetic arrangements, these reforms are likely to strengthen corporate governance, transparency, and market liquidity in Main Market listed securities. They are also anticipated to bolster initial public offering (IPO) participation, valuations, and secondary market activity.

While these changes are positive for foreign investors, they must still comply with market-level operational requirements. This includes onboarding through licensed Saudi brokerage firms, adhering to custody and settlement arrangements, and following general market conduct rules.

In conclusion, the CMA’s regulatory reforms signify a significant step towards opening up the Saudi capital markets to foreign investors, attracting international capital, and enhancing the overall appeal of the Main Market. These adjustments are expected to stimulate increased foreign investment, improve market liquidity, and foster a more robust and transparent investment environment in Saudi Arabia.