QFI Information Memorandum:
Our key objective is to become an active player in global capital markets both as a source of capital and as an investment destination. Tadawul continues to build on its commitment to creating new opportunities for issuers and investors and to leading capital markets development as the largest capital market in the region.
As a major player in Kingdom’s Financial Sector Development Program (FSDP), Tadawul aims to support the development of a diversified and effective financial sector, diversify its sources of income, and stimulate savings, finance and investment.
Today, Saudi Arabia is by far the largest economy in the Middle East and North Africa with Gross Domestic Product (GDP) of more than USD 780 billion as of 2018, representing around 1.26 percent of the world’s economy. Saudi Arabia has a long-term track record of growth, high rates of investment and stable monetary and exchange rate policies. Additionally, the Kingdom is an important member of the G20 countries.
Tadawul has worked closely with the Capital Market Authority to make the Saudi market attractive to international investors by improving market function and efficiency, expanding access, improving corporate governance and increasing transparency. These far-reaching measures have enhanced liquidity, bolstered investor security, mitigated risk, reduced price volatility and brought market practices in line with international standards.
As a validation of the capital market reforms and enhancements, the Saudi market has been included in global benchmark indices such as MSCI, FTSE Russell and S&P Dow Jones, and with an average weight of around 2.8%, Saudi Arabia was on MSCI’s watch list for less than one year before being included in the MSCI Emerging Markets Index, the shortest period any country has spent in the watch list in the history of the index.
Through the Qualified Foreign Investor (QFI) program, international investors have direct and consistent access to the Saudi capital market. The program was introduced in June 2015 and has been amended as recently as June 2019 to ease registration requirements and expand the range of eligible institutional investors.
Each QFI, may not own 10% or more of the shares of any issuer whose shares are listed or convertible debt instrument of the issuer. No more than 49 percent of an issuer may be owned in aggregate by foreign investors, except for foreign strategic investors. Entities eligible for QFI status include banks, brokerage and securities firms, insurance companies, investment funds, and government and government-related entities. Prospective QFIs must be licensed or subject to regulatory oversight. With the exception of government-related entities, applicants must have assets under management of at least $500 million.
As of October 2019, more than 1,500 international financial institutions have registered as QFIs.
Applications for QFI status are made to an assessing authorized person and, where applicable, should include a list of the QFI's affiliates or foreign portfolio managers, evidence of regulatory status, a copy of the most recent annual report and accounts, audited financial statements, and details of any suspension or revocation by a regulator of any license or permission held by the entity.
Full details of the QFI rules can be found here
For more information on how to become a QFI, Please click here
or contact us via email at firstname.lastname@example.org