The Capital Market Authority (CMA) announced that, as of 1st of January 2018, foreign investors would be granted direct access to invest in the Parallel Market "Nomu" on similar terms as those to local investors.
Mohammed ElKuwaiz, Chairman of the CMA, stated that this step is part of the CMA's efforts to achieve Saudi Arabia's Vision 2030.
These steps would help developing the Saudi capital market into the premier regional market while enhance its role as a driver for economic growth.
Mr. ElKuwaiz confirmed that this step is in line with the overall strategy of the CMA to increase foreign investors access to the Saudi capital market. would make investing in this market "Nomu" available to additional categories of investors, therefore, increasing its stability and robustness. The conditions to qualify for investing in "Nomu" will be required from both foreign and local investors.
This is aligned with the CMA's continuous developments in the Saudi market to attract more foreign investors to increase its liquidity and in a bid to become the main market in the Middle East region. In 2015, the CMA started the deregulation process by allowing foreign financial institutions to invest directly in the Saudi capital market. These initial steps were followed by several further regulation and infrastructural developments that aimed to ease foreign investment access to the capital market. It is worth mentioning that the CMA is working in parallel with the country's General Investment Authority (SAGIA) to set up a framework for non-residential strategic investors to own strategic stakes in listed companies. This would augment the current QFI regime to create more options for foreign investors.
The eligibility criteria in order to trade and participate in the Parallel Market “Nomu" are any of the following persons:
1. Authorized Persons act for their own account
2. Clients of a person authorized by the CMA to conduct managing activities.
3. The Government of the Kingdom, any government body, any supranational authority recognized by the Authority or the Exchange.
4. Government-owned companies either directly or through a portfolio managed by a person authorized.
5. Companies and funds established in GCC countries.
6. Investment Funds.
7. Qualified Foreign Investors.
8. Any other legal persons allowed to open an investment account in the Kingdom and at the Depositary Center.
9. Natural person fulfil any of the following criteria
a) conducted transactions in security markets of not less than 40 million Saudi riyals in total, and not less than ten transactions in each quarter during the last twelve months
b) the average size of his securities portfolio shall exceed 10 million Saudi Riyals during the last twelve months,
c) holds a professional certificate in securities which is recognized by the CMA or an accepted jurisdiction.
In addition, the CMA issued a guidance note for the investment of non-resident foreigners in the Parallel Market "Nomu", which aims at clarifying the mechanism of investment and related restrictions.
The Guidance Note for the investment of Non-Resident Foreigners in the Parallel Market and the Parallel Market Listing Rules can be found on the CMA's website www.cma.org.sa
