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Saudi Arabia eases QFI rules for investors

The Saudi Stock Exchange, also known as the Tadawul All Share Index in Riyadh, Saudi Arabia.

Saudi Arabia's Capital Market Authority has amended its qualified foreign investor framework rules, easing the requirements for foreign financial institutions and expanding the range of institutional investors eligible for the QFI program, effective Jan. 23.

The CMA said Tuesday it had eliminated the requirement that it review and approve of QFI qualification under the rules. Also, the assets under management or custody requirement for QFIs was lowered to $500 million from $1 billion, and now eligible subsidiaries and managed strategies of QFIs will be automatically qualified, removing the need to submit separate applications.

The amendment follows an update in 2016 to the QFI program, which was launched in June 2015.

As of end-2017, 118 foreign financial institutions had registered as QFIs.

"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" said Mohammed el-Kuwaiz, chairman of the CMA, in a news release. "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."

The amended rules are available on the CMA website.

The CMA implemented a number of other capital market reforms last year, including enabling securities borrowing, lending and short selling, as well as the adoption of updated corporate governance rules. It also allowed foreign institutional participation in Saudi domestic initial public offerings.

"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," said Mr. el-Kuwaiz.