Saudi regulator clarifies rules on market access

FAQThe Saudi Arabian financial regulator, the Capital Market Authority (CMA), has released an updated guide to understanding the rules governing foreign investor access to the country’s stock exchange.

Qualified foreign institutional investors have been able to buy shares on the exchange, the Tadawul, since June 15, however, foreign inflows have so far been modest.

Arindam Das, regional head of Middle East and Africa, HSBC Securities Services, recently told Funds Global MENA the low take-up so far was due in part to documentation requirements by the regulator.

He said one area of uncertainty concerned the CMA’s requirement to provide details on the investment activities of asset managers’ affiliates. Another related to the requirement for disclosure of underlying beneficial ownership of collective investment vehicles, such as mutual funds, including those domiciled in European jurisdictions that prohibit such disclosures.

The updated set of frequently asked questions (FAQs) by the CMA contains answers to 80 different queries, including which foreign institutions are eligible to register with the CMA and how the registration process works.

One of the points the CMA clarified was that it has no intention of changing the T+0 settlement cycle in Saudi Arabia, in which trades must be settled the same day they are executed. Most countries use a T+2 or T+3 cycle.

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