Saudi Arabia Opens Tadawul Main Market to All Foreign Investors from February 2026

Saudi Arabia will allow all foreign investors to directly access Tadawul’s Main Market from February 1, 2026, following CMA regulatory reforms.

Starting February 1, 2026, Saudi Arabia will expand access to its capital market by enabling all categories of foreign investors to directly participate in the Main Market of the Saudi Stock Exchange (Tadawul), following the Capital Market Authority’s (CMA) approval of a revised regulatory framework. The amendments remove the Qualified Foreign Investor (QFI) concept in the Main Market, allowing foreign investors to access the market without the need to meet qualification requirements.

The CMA also eliminated the swap agreement framework, which offered indirect exposure to listed securities only through intermediaries. Market access is broader, but the practical impact will still depend on onboarding through brokers and custodians and on applicable foreign ownership limits, as larger effects could follow if existing foreign ownership limits, including the 49 percent cap referenced in market commentary, are revised in the future.

Key changes under the Capital Market Authority framework

The CMA has approved reforms that expand foreign participation in Saudi Arabia’s Main Market, and the reforms remove two long-standing access routes and enable direct share ownership for non-resident investors. First, the CMA has abolished the QFI regime. Under the previous model, many overseas institutions were only able to invest directly after meeting prescribed eligibility thresholds and completing a formal qualification and registration process tied to QFI status.

Second, the CMA has removed the regulatory framework for swap agreements. Historically, this framework provided non-residents with indirect economic exposure to listed securities through intermediary structures rather than outright ownership.

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According to the recently updated framework, eligible non-resident foreign investors are permitted to acquire listed shares through direct ownership. This change is expected to simplify market entry, broaden the investor base, and support deeper market liquidity. However, it should be noted that the reforms do not completely eliminate all constraints on foreign participation.

Investors should remain vigilant in monitoring any applicable foreign ownership limits, potential issuer-level restrictions, and sector-specific requirements where relevant. Additionally, the operational mechanics of market entry remain crucial. Foreign investors will still need to complete onboarding with brokers and custodians, satisfy know-your-customer (KYC) checks, and ensure settlement, custody, and ongoing compliance and reporting processes are in place.

Impact on market participants and practical implications

The revised CMA framework will have different implications across market participants. For foreign institutional investors and other non-resident participants, the removal of the QFI and swap-based access routes simplifies entry by enabling direct share ownership. This may reduce structural and administrative barriers to participation, although investors will still need to navigate applicable foreign ownership limits, issuer-level restrictions, and local market rules. The practical impact is likely to vary by investor type, with larger institutions already active in the market seeing incremental benefits, while new entrants may find access more straightforward.

For brokers, custodians, and compliance teams, the changes shift the focus from eligibility structuring to operational execution. Intermediaries will play a central role in onboarding foreign investors, conducting KYC and due diligence checks, managing settlement and custody arrangements, and monitoring foreign ownership thresholds on an ongoing basis. It may be necessary to update internal systems and reporting processes to reflect higher volumes of direct foreign participation.

For publicly traded companies, broader foreign access could influence shareholder composition, trading liquidity, and engagement with international investors. Companies may face heightened expectations regarding disclosure, investor relations, and transparency, particularly as foreign participation increases and ownership structures evolve.

Investor action points and next steps

Foreign investors preparing to take advantage of Saudi Arabia’s expanded market access should consider the reform as an implementation project, rather than merely a regulatory headline. First, firms should confirm the onboarding route and documentation requirements with a preferred broker and custodian. Although the CMA has eliminated the QFI gate and discontinued swap-based access, investors will still need to complete account opening and operational set-up. This typically includes up-to-date corporate documentation and completion of KYC and anti-money laundering (AML) checks. Investors operating multiple funds or vehicles should confirm whether each entity requires separate onboarding and align internal approvals to avoid delays close to the effective date.

The next step is to update the controls for foreign ownership thresholds and monitoring. While expanded access may not automatically eliminate foreign ownership limits or issuer-level restrictions, these constraints can impact both trade execution and portfolio construction. Investors should integrate ownership-limit checks into their pre-trade compliance workflows, define escalation procedures if limits are approached, and coordinate closely with brokers or custodians on how limits are tracked in practice. Investors who rely on passive or benchmark-driven strategies should also plan for rebalancing windows, where higher trading volumes can increase the risk of failed trades if limits are in place or liquidity is limited.

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Finally, review tax, reporting, and operational readiness. Investors should validate dividend and withholding assumptions (and any documentation needed to apply treaty positions where relevant), confirm how corporate actions will be processed, and ensure internal systems can produce clean audit trails and regulatory reporting outputs.

Operationally, please confirm settlement mechanics, reconciliation processes, and cash management arrangements. For organizations looking to meaningfully expand their exposure, it may also be prudent to refresh internal policies on disclosure, market conduct, and inside-information handling to reflect greater direct participation.

Post-implementation watch points

Following implementation, investors are advised to closely monitor any subsequent rulemaking and practical guidance issued by the CMA, the Saudi Stock Exchange, and market infrastructure providers. Even when the core reform is clear, secondary guidance can materially influence how onboarding, reporting, and ownership monitoring work day-to-day, particularly if intermediaries apply requirements differently in the first months. Watch for clarifications regarding the scope, including instruments, segments, and eligible investor categories. Investors should also monitor updates on documentation standards and any compliance obligations placed on intermediaries and end-investors. Early operational friction, such as onboarding bottlenecks or inconsistent interpretations, should be regarded as an opportunity to adjust timelines, sequencing, and execution plans.

A secondary observation to consider is the potential for authorities to implement additional liberalization measures, such as adjustments to foreign ownership caps or the broader availability of instruments for foreign investors. Market expectations about capital inflows often hinge on how ownership ceilings evolve over time. Therefore, investors should track both formal amendments and credible policy signals. In addition, investors should monitor index provider responses and any changes in index eligibility, weighting, or inclusion treatment, as these can influence benchmark-linked flows and impact execution around rebalance dates.

Finally, monitor early market signals in the initial months, especially liquidity, volatility, and index-related flows. Expanded accessibility can support deeper liquidity over time, but it may also introduce short-term volatility as new entrants reposition portfolios and local and foreign investor behavior diverges. Investors should track bid—ask spreads, trading volumes, and market depth (including in less-liquid names), and reassess execution cost assumptions. Active strategies may need to recalibrate liquidity and slippage parameters; passive strategies should watch tracking error and implementation shortfall around rebalancing windows. In short, the policy lowers structural barriers, but post-implementation outcomes will depend on operational readiness, market mechanics, and the direction of follow-on reforms.

Key takeaways

• Foreign market entry is simplified as direct share ownership replaces the QFI and swap-based access routes.
• While the reform lowers structural barriers, it does not eliminate foreign ownership caps, onboarding checks, or ongoing compliance obligations.
• Brokers, custodians, and compliance teams will play a greater role in account set-up and ownership monitoring.
• Ahead of implementation, investors should update internal documentation, ownership-threshold controls, and operational readiness.
• Further regulatory clarification or follow-on liberalization measures remain possible and should be closely monitored.

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