The Saudi Capital Market Authority (CMA) announced on July 11, 2025, a regulatory reform that allows individual foreign investors from Gulf Cooperation Council (GCC) member countries to open investment accounts directly in the Saudi main market without going through traditional brokerage intermediaries. This policy, through the revision of documents such as the “Investment Account Instructions” and “Foreign Securities Investment Rules,” grants GCC citizens equal market access rights as local Saudi investors, marking a key step in Saudi Arabia’s strategy to establish itself as a regional financial center.
Core Policy Content and Implementation Details
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Direct Market Access GCC foreign nationals can bypass brokers and invest directly in products such as stocks and funds in the Saudi main market through online platforms. Previously, non-Saudi investors could only participate in the main market indirectly through swap agreements or debt instruments. This breakthrough significantly lowers the investment threshold and is expected to attract high-net-worth individuals from GCC countries like the UAE and Bahrain into the Saudi market.
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Simplified Account Opening Process The account opening process is completed through a digital platform, including online identity verification, address proof submission (must be precise to the house number), video authentication, and binding with a third-party custodian bank. Notably, the new “Investment Law” came into effect in February 2025, eliminating the requirement for foreign investment licenses. Therefore, individual investors do not need to apply for additional government permits and can complete registration by providing basic documents such as a passport and proof of residence.
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Cross-Border Investment Continuity Assurance Even if investors leave Saudi Arabia or the GCC region, they can continue to operate their accounts and conduct transactions, provided that the account was initially opened within Saudi Arabia. This design aims to eliminate liquidity concerns for long-term investors and enhance market stickiness.
Policy Goals and Strategic Significance
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Enhancing Market Liquidity and Internationalization The foreign participation rate in the Saudi stock market has been relatively low, with qualified foreign investors (QFIs) holding approximately $94 billion in January 2025. The new policy, through direct access mechanisms, is expected to attract more GCC capital inflows, further activating market transactions. CMA data shows that Saudi IPO financing reached $4.1 billion in 2024, ranking first in the GCC, and this trend is expected to continue after the policy implementation.
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Strengthening Regional Financial Center Status Saudi Arabia is competing with Dubai, Abu Dhabi, and other Middle Eastern financial hubs through multiple reforms. For example, in 2023, the Hong Kong-Saudi Stock Exchange signed a memorandum of cooperation to promote dual listings and ETF cross-listing. This policy, combined with fintech support (such as Sahm Capital’s online trading platform), aims to create a comprehensive international service system from account opening to trading and settlement.
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Promoting Economic Diversification Transformation As part of the “Vision 2030,” Saudi Arabia plans to increase the private sector’s contribution to GDP from 40% to 65%. Opening the capital market is a key lever—by attracting foreign investment, it can inject funds into strategic areas such as renewable energy and digital infrastructure while cultivating a local financial ecosystem and reducing dependence on the oil economy.
Supporting Measures and Technical Support
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Financial Technology Infrastructure Upgrade The Saudi Cloud Computing Company (SCCC), a joint venture with Alibaba Cloud, serves 50% of the local fintech market, providing secure data storage and transaction support for online account opening. The regulatory sandbox mechanism allows companies to test innovative products in a controlled environment, such as the AI-driven investment tools of digital bank STC Bank, further lowering the technical application threshold.
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Tax and Regulatory Coordination GCC citizens’ investment income is subject to a 2.5% zakat tax, while non-GCC investors must pay a 20% corporate income tax. This differentiated tax system design reflects preferential treatment for regional investors while avoiding capital outflow through tax neutrality principles. Additionally, the CMA collaborates with the Hong Kong Securities and Futures Commission to promote cross-border listing training, enhancing market transparency and international recognition.
Potential Impacts and Challenges
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Impact on Local Intermediary Industry Traditional brokers may face business contraction pressures but must also transform into value-added service providers, such as offering in-depth market analysis or cross-border asset allocation solutions. Some institutions have begun collaborating with fintech companies to explore integrated online and offline service models.
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Investor Protection and Compliance Risks Although the policy simplifies processes, the CMA still requires investors to complete risk assessment tests and monitor abnormal transactions through algorithms. Additionally, data privacy must comply with the Personal Data Protection Law (PDPL) to ensure that customer information transferred across borders meets regulatory requirements.
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Regional Competition and Coordination The UAE has recently introduced policies such as the “Golden Visa” to attract foreign investment, and Saudi Arabia must continue to break through in licensing, product innovation (such as green bonds), and other areas to consolidate its competitive advantage. Meanwhile, regulatory coordination among GCC countries (such as unified KYC standards) will be a key variable in the effectiveness of policy implementation.
Conclusion
This policy reform in Saudi Arabia is a milestone in its capital market opening process. Through a dual drive of “technology empowerment + institutional relaxation,” it is expected to reshape the financial landscape of the Middle East. For GCC investors, this means a more convenient cross-border investment channel; for Saudi Arabia, it is a solid step towards its goal of becoming a global financial center. Future attention should be paid to the implementation details of the policy (such as whether minimum investment amounts imply restrictions) and market reactions, especially the scale of foreign capital inflows and the adaptability of the local intermediary industry.