Saudi Arabia’s Capital Market Authority (CMA) has approved regulatory amendments as of the 26th June 2025 to allow foreigners to trade directly on the main market – instead of being “limited to swap agreements as ultimate beneficiaries through capital market institutions or as clients of these institutions, where investment decisions are made on their behalf”.
This liberalization comes by introducing a new category of investors to the shares listed on Tadawul, a move that is expected to attract more foreign investments, enhance market liquidity and contribute to supporting the local economy.
This new investor category also incorporates elements for an investment account for individual foreign investors residing in one of the GCC countries – adding to existing access by foreign investors to the debt market, the Nomu parallel market, investment funds and the derivatives market.
The CMA further allows “individual foreign investors who previously resided in Saudi Arabia or one of the GCC countries to continue operating their investment accounts and invest in shares listed in the main market even after their residency has ended and they return to their home country”.
The change comes as the CMA announced on the 7th July 2025 regulatory measures – extending those issued in 2020 – to allow companies listed on the local capital market to issue certificates of deposit outside Saudi Arabia in exchange for their shares traded in the Saudi capital market.
The expanded regulatory framework will allow foreign companies to register and offer depositary receipts in the Saudi capital market representing their shares listed in foreign markets, upon obtaining the required approval.
The issuer of the Saudi depositary receipts will also be subject to the same continuing obligations applicable to a foreign company that lists its shares on the main market under the Listing Rules – furthering the aim to enable local and international investors to trade Saudi depositary receipts representing the underlying foreign shares.
In addition, the CMA approved new rules to foster the growth of the investment fund and real estate investment fund sectors – including expanding fund unit distributions to include platforms and electronic money institutions licensed by the Saudi Central Bank, through websites or mobile apps.
For private and foreign investment funds, holdings of retail investors must not exceed 50% of the total cash subscriptions in the fund at the time of offering. In the case of closed-ended private or foreign funds, the transfer of fund units must not, under any circumstances, result in retail investors in the Kingdom holding more than 50% of the total value of the fund’s units through cash contributions.
Other changes are the lifting of ratio restrictions on real estate development project investments by REITs and allowing public funds to subscribe to debt instruments offered privately by issuers within the Kingdom.
These regulatory measures come after 2024 saw the launch of 44 new investment funds across various categories including 15 equity funds, five money market funds, seven endowment (Waqf) funds and four exchange-traded funds – in addition to real estate funds and other specialized funds.
“Investment funds accounted for the largest share of AuM, reaching approximately SAR700 billion (US$186.67 billion) by the end of 2024, reflecting a growth rate of 25.2% compared to 2023.”
