Tadawul and Saudi Arabia’s Capital Market Authority (CMA) are the largest Arab bourses which have showed to market participants the details of the proposed framework of foreign ownership. “The plan of Saudi Arabia opens up its stock market would limit direct foreign ownership to investors with at least $5 billion under management and would allow each holding a maximum 5 percent of a stock’s issued share capital”, two industry sources told.

A source familiar with the matter said to Reuters that total direct ownership of each stock would not be permitted to have more than 20 percent of the issued share capital. At this time, foreigners have limited opportunities to invest through indirect ownership and exchange traded funds which could track indexes. The source also added that in the new framework, total foreign investment in a listed firm which include swap notes, non-Gulf Arab foreigners and expatriates in Saudi Arabia, would not be permitted to have more than 49 percent stock.

The source also said that there is still no clue of how many the fees or commissions for trading would be. Saudi Arabia has considered a wider opening of its market for several years. Abdullah al Suweilmy as the chief executive of the kingdom’s exchange explained to reporters that earlier this week, it has not finalized a timeframe to open up its market, but industry sources said that it would happen as early as mid to late first quarter of 2012.(Reuters.com)