The Capital Market Authority (CMA) has issued a set of draft rules for foreigners ahead of the opening of the $580 billion Saudi stock exchange to global investors next year.
The CMA said a qualified foreign investor must be a bank, brokerage, fund manager or insurance company with at least SR18.75 billion ($5 billion) in assets under management.
“The CMA may reduce the minimum assets of potential investors to SR11.25 billion ($3 billion),” the market regulator said in a statement published on its website, inviting public comments.
“All comments and observations by interested parties will be considered for issuing the final rules,” it said.
A final version of the rules is expected to be published after a three-month consultation period with banks, government officials and other market participants.
“The applicant must be a legal person that falls within one of the following classes of financial institutions: banks; brokerage and securities firms; fund managers; and insurance companies,” the CMA said, adding that they must be licensed or subject to regulatory oversight by a regulatory authority.
The applicant or any of its affiliates must have been engaged in activities related to securities and investment for a minimum of five years, the draft law said.
“A qualified financial institution (QFI) may not invest in listed shares on behalf of any of its clients unless the client has been approved in accordance with these rules,” it added.
The maximum proportion of the issued share of all issuers whose shares are listed that may be owned by QFIs and approved QFI clients in aggregate is 10 percent by market value, including any interests under swaps, the law said.
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