In a historic move that will redraw the investment map in the region, the Saudi Capital Market Authority that it will open direct investment in the main market to all categories of foreign investors, including non-residents, starting from February 1, 2026. This decision comes after the Authority’s board approved the new regulatory framework, which aims to liberalize the market more broadly and remove previous restrictions that limited direct investment to specific categories.
The end of the era of the "qualified foreign investor"
Key reforms included the elimination of the Qualified Foreign Investor (QFI) system in the main market, a framework that imposed stringent financial and administrative requirements on international financial institutions seeking entry. Under the new system, foreign investors will no longer need to meet the previous complex qualification requirements, removing bureaucratic hurdles and facilitating capital flows.
The decision also included the cancellation of the regulatory framework for swap agreements, which were previously used as an alternative mechanism to allow foreigners to benefit from the economic returns of shares without actually owning them. With the new amendments, foreign investors will be able to own shares directly, thus strengthening shareholder rights and enhancing transparency and governance in listed companies.
Context of the historical development of the financial market
To understand the significance of this decision, it must be viewed within the historical context of the development of the Saudi financial market (Tadawul). The Kingdom began its journey of opening the market to foreigners gradually and cautiously in 2015 with the launch of the Qualified Foreign Investor Program, followed by pivotal steps that included joining emerging global indices such as MSCI and FTSE Russell in 2018 and 2019. The current step is the culmination of a long path of structural reforms aimed at upgrading the Saudi market from an emerging market to a globally developed market.
Economic impact and the goals of Vision 2030
This step is perfectly aligned with the objectives of the Kingdom's Vision 2030 , specifically the Financial Sector Development Program, which aims to make the Saudi financial market a regional and global hub for finance and investment. Opening up direct investment to all is expected to contribute to:
- Increasing market depth and significantly raising daily liquidity rates.
- Diversifying the investor base and reducing fluctuations resulting from ownership concentration.
- Enhancing asset pricing efficiency and attracting long-term foreign capital instead of hot money.
Confidence and growth indicators
The current figures reflect the success of previous policies, as data indicated that the size of international investors’ ownership in the financial market exceeded 590 billion riyals by the end of the third quarter of 2025. This figure is expected to double with the entry into force of the new regulations in 2026, confirming the Kingdom’s growing position as a safe and attractive investment destination in light of global economic challenges.
