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Saudi Arabia may relax rules on stock market investment

Saudi Arabia would be prepared to relax rules on foreign investment in its stockmarket if that would help it to be included in global indices, according to a Reuters report. 26 Oct 2015

Mohammed al-Jadaan, chairman of the Saudi Arabian Capital Markets Authority (CMA) told Reuters that the stock exchange, known as the Tadawul, was already seeing benefits from giving foreign firms limited access. 

"One of our objectives is to ensure we are included in international indices, and we will obviously, in a prudent way, look to ways to ensure we convince them that the market is ready to be placed in their indices," Jadaan told Reuters.

"We will do whatever is needed from a regulatory point of view to be ready," he said, according to Reuters.

The Tadawul was opened in June to qualified foreign investors including banks, brokerages, fund managers and insurance companies with at least 18.75 billion riyals (US$5 billion) in assets.

Previously only the six states that form the Gulf Cooperation Council (GCC) had free access to the Tadawul. Foreign investors have been permitted to access the market through equity swaps and exchange-traded funds since 2008.

Foreign trading on the Tadawul has been limited to date, but Jadaan told Reuters that liquidity "was not a key objective". There is a "very healthy IPO pipeline" of both private and government entities and " we are making every effort to make sure our procedures are improved and that we have all the tools to facilitate the process", he said, according to the news report..

The CMA is also considering a second exchange for small to medium sized and family businesses, a local debt market, and new rules to help mergers between listed companies, Jadaan told Reuters.