Qualified foreign investors including banks, brokerages, fund managers and insurance companies with at least 18.75 billion riyals (US$5 billion) in assets will be allowed direct access to the market, known as the Tadawul.
The country's Capital Markets Authority originally announced its intention to open up the market to foreign investors last year and published the final rules in May.
Qualified foreign investors must be approved by the CMA, which reserves the right to reduce the minimum asset value to $3 billion, the CMA said in May.
Rules include a tax of 5% on dividends for foreign investors. A single investor may not own more than 5% of a company by stock market value, and a group of foreign investors cannot own more than 10%. Foreign ownership of a company cannot be more than 49% overall, the CMA said.
Dubai-based Sachin Kerur of Pinsent Masons, the law firm behind Out-Law.com, said that the inflow of international finds into the Saudi market "could potentially be significant".
"This is particularly true given the world-class Saudi companies that exist with healthy cash balances and exposure to attractive markets such as oil, petrochemicals, food and beverages and general household items. The large pool of domestic investors will also promote a healthy demand for the market," he said.
"In relation to the wider GCC [Gulf Cooperation Council countries], this could have a profound effect if regionally based companies believe that access to foreign institutional investments and healthy trading conditions were more accessible in Saudi than elsewhere in the region," Kerur said.
Previously only the six states that form the Gulf Cooperation Council (GCC) have free access to the Tadawul. Foreign investors have been permitted to access the market through equity swaps and exchange-traded funds since 2008.
Saudi Arabia’s is looking to diversify its traditionally energy-intensive markets as the price of oil remains at a historic low: income from oil accounted for almost 90% of the country’s revenue last year, according to Bloomberg.