Market Profiles

FII Market Entry Requirements for Saudi Arabia

RBC IS operates a segregated account structure in this market.

Please refer to 'Market Account Opening Requirements' for information on the market requirements. Clients are requested to refer to the requirements for information purposes only.

For further information or support around accessing this market, please contact your RBC IS representative.

Tadawul - the Saudi Stock Exchange

The Saudi Exchange operates as a subsidiary of the Saudi Tadawul Group. The Securities Depository Centre Company (SDCC/EDAA) is a separate joint stock company solely entrusted to execute the transactions of deposit, transfer, settlement, clearing and registering ownership of securities (equities, ETF, government bonds, REITS and corporate bonds) traded on the Stock Exchange. The Securities Depository Centre Company is regulated by the Capital Market Authority.

All trades are electronically processed through Tadawul's trading system and settlement is through the Tadawul Department. Trading is screen-based and electronic with brokers inputting bid and offer prices for their clients to the system. The trade will be executed when the price is matched. Once a trade is matched and executed, the shares are electronically moved between the buyer's and seller's accounts immediately. Therefore, a seller must have the shares available in the account at the time of placing an order.

The Tadawul trading system provides:

• Real-time information on trading prices and volumes.

Speed settlement and clearing of trades, with the transfer of ownership by book-entry occurring immediately after a buy and sell order are matched.

Sunday - Thursday

ISIN (International Securities Identification Numbering): Saudi stock market uses the ISIN asset identifier.

Other: Local codes

Capital Market Authority - The Capital Market Authority was established by the Capital Market Law, issued by Royal Decree No. (M/30) dated 2/6/1424 H (June 16, 2003). The CMA is a government organisation with financial, legal and administrative independence. It reports directly to the Prime Minister. 

The CMA functions are to regulate and develop the Saudi Arabian capital market. It issues the required rules and regulations for the implementation of the provisions of Capital Market Law aimed at creating an appropriate investment environment.

Securities are held in dematerialized form.

Equities held with Tadawul.

Corporate and government bonds and sukuks held with Tadawul Treasury Bill: held with SAMA, the central bank

In line with the increasing growth in the market's number of transactions and listed companies, Tadawul has amended the current unit of price change (25 Halalas) to vary in accordance with the price of the share:

The Saudi Stock Exchange implemented T+2 settlement cycle for all listed securities on April 23, 2017.

SAR

There is no OTC market in Saudi Arabia except for Treasury-bills.

Book-Entry: All trades and settlement in the market are conducted via book entry form.

Procedure for Buy and Sell Trade (T+2)

Note:
Since Saudi Arabia market is open from Sunday to Thursday, for trades executed on Wednesday, funding arrangements have to be made latest by Thursday 4:00 pm Saudi time.

Matching is only at the trading level when orders are input to the market after which the securities settlement is effected online. Settlement confirmations flow back from the depository system into the trading/ order management systems and securities positions are reported online on the depository systems.

In February 2019, SDCC developed new functionality whereby a sub-custodian can reject an unmatched market trade using an investor’s NIN as rejection criteria instead of order numbers.

SDCC / EDAA Fees or Charges

Under the T+2 settlement model, fees are levied by the Securities Depository Centre Company (SDCC) on a transaction based mechanism. These fees may be charged either to the local broker or the custodian, and subsequently may be passed on to client. These late settlement fees are determined by the Securities Depository Center (EDAA).

Trades covered under the penalty scope include all buy and sell against payments settling late on T+3 onwards. GC to send amended settlement instruction (in case of unmatched trade) & Late Settlement SI (MT 599) to HSBC SA to enable HSBC SA to enter into late settlement confirmation with the exchange. HSBC SA will submit the late settlement forms to the exchange and confirm late settlement.

If the form is submitted any time before 11am on T+3, it will be settled on the same day. However if the form is submitted after the cut-off time, it will be performed the next day i.e. T+4. As such it will be subjected to additional late settlement fees. Original trade details of the executed market trade are required to be indicated in the Late Confirmation Transfer form.

T+4 11:00 a.m. is deadline for confirming late settlement trade. If rejected trade is not confirmed by then, the trade will fail.

By T+4 (11:00 am KSA time), if the rejected trade is not confirmed, SDC will perform a mandatory buy-in on behalf of client at T+5 for all outstanding amounts of failed settlement, taking into account the trades that will be settled next business day. Late settlement fees and penalties applied by EDAA will be advised in our monthly invoice. Custodian Debit Date is one business day before Market Debit Date for the penalty. Custodian will debit end investor’s account which should be funded promptly as unauthorized OD is not allowed for custody / securities linked cash accounts.

Below are the charges that will apply if the trade is late settled on T+3 and T+4:

• SDCC will charge the exchange member, i.e. the broker, late settlement fee of 31bps (with min. of SAR2,000, and max. of SAR20,000) for any late market settlement per day. It is worth noting that late confirmation request has to be submitted before 11 am on T+2 or T+3 to be executed by SDCC on the same day. Otherwise, it will be executed on the next day.
• SDCC will charge the transferor (i.e. the custodian in case of rejected sell trade, the broker in case of rejected buy trade) SAR250 per transfer request.
• SDCC will charge the broker SAR1,500 for processing late settlement per rejected trade and will be increased to SAR3,000 during corporate action event.
• SDCC will charge the broker SAR3,000 per mandatory buy-in or cash substitution transaction. It is worth noting that buy-in or cash substitution as compulsory fail management mechanisms start from T+4 after trading session.
• To initiate late confirmation, SDCC has published the form that needs to be filled out and signed by the broker and the custodian.

Covered short selling is allowed.

In independent custody model, turnaround trade is possible however such condition does not apply.

Saudi Arabian Monetary Authority (SAMA) - is the Central Bank for Saudi Arabia and is responsible for issuing the national currency, supervising commercial banks, managing the country's foreign exchange reserves and conducting monetary policy for the promotion of price and exchange rate stability. 

All payment for settlement must be via the SARIE (Saudi Arabian Riyal Inter-bank Express SAR payment system). Funds are transferred between banks electronically via the Saudi Arabian Riyal Inter-bank Express SAR payment system (SARIE).

In early 2020, Muqassa obtained the CMA licence to conduct clearing services in the Saudi capital market as the first Qualified Central Counterparty (QCCP) in Saudi Arabia to clear securities traded at the exchange, along with other products.

The SDCC company is a joint stock company, which is licensed and regulated by CMA.  The SDCC Company has its own board of directors represented by members from The Saudi Exchange “ Tadawul” and independent members. They are based in same premises as the Saudi Stock Exchange and are regulated by the Saudi Arabian CMA.

It is mandatory to use the Tadawul Department for trading in all listed securities. With the implementation of the Tadawul system, the market has become totally dematerialized and has achieved same-day settlement (T+0, where T is the trade date). 

The Tadawul created the Securities Depository Center Company (Depository Center) as a closed joint stock company, which is fully owned by Tadawul. The Depository Center has been established in accordance with the Saudi Companies Law with a capital of SAR400,000,000 divided into 40,000,000 shares, with a nominal share value of SAR10.

The Depository Center main activities include the following:

- Creating and registering investment portfolios in the deposit and settlement system

- Ownership registration and registry of ownership limitations for deposited securities

- Deposit, transfer, settlement, clearance, and linking market members and settlement agents with the deposit and settlement system

- Linking and managing logs of securities issuers, and regulating issuers’ general assemblies, including offering remote voting services, reports, notifications, necessary data

- Other related services in accordance with the Capital Market Law (CML)

Not currently applicable to this market.

Book-Entry: All equities are automatically registered upon settlement through the Tadawul Department. Registration is in the beneficial owner's name.

Physical: Not applicable

Tadawul

The electronic movement of shares to the buyers account constitutes registration.

Disclosure is not necessary as foreign ownership limits are monitored by the Tadawul and CMA. The Tadawul trading system will reject a transaction at the input stage should the limits be exceeded by the transaction.

Saudi Arabian Capital Market Authority (CMA) announced that Saudi Arabian capital market would be opened to all categories of foreign investors as of February 1, 2026.

Fails management process

Securities lending is not currently practiced however is recognized by the regulatory authorities in Saudi Arabia.

Presently there is no guarantee fund for investor protection in Saudi Arabia

Saudi Arabia is a member of the FATF and has in place an Anti-Money Laundering Law enforced by the Saudi Arabian Monetary Authority (SAMA).

This is an FII market. Please contact your RBC Investor Services representative before making portfolio investments.

Investors must open a cash and security account with the subcustodian, and an access trading portfolio account with the stock exchange (Tadawul). Under ICM, they need to open trading portfolio accounts under ICM.

GCC investors are defined as:

Individual Gulf Co-operation Council (GCC) investors - citizens holding nationality of any GCC country.

GCC Company - a company registered in one of the GCC countries, with most of the company's capital owned by GCC citizens or governments.

The GCC states are: Saudi Arabia, Kuwait, Bahrain, Qatar, UAE and Oman.

All FII accounts are subject to approval which includes investment in shares, T-Bills and Mutual Funds.

As part of a government initiative to open the market to foreign investment, the regulations have been changed to allow all categories of foreign investors to invest into the Saudi Arabian capital market.

Mutual funds are not allowed to own more than 5% of the shares of any joint-stock company. An Investor is not allowed to own more than 10% of the total NAV of the fund.

Permitted financial institutions:

1. Banks.
2. Brokerage and Securities Firms.
3. Insurance companies.
4. Government and government related entities including sovereign funds and funds fully owned directly or indirectly by government entities.
5. Investment funds (e.g. pension funds, endowments, collective investment schemes).
6. Financial institution considered eligible by CMA.

The applicant or any entities of its group must have minimum AUM equivalent to USD 500 million.

CMA permits all investor types, local and cross-border, to invest in debt securities in Saudi Arabia.

Repatriation can be done freely via a non-resident account.

Saudi Arabia currently has no foreign exchange controls and there are no restrictions on the repatriation of capital, capital gains and income, provided that the transfers are made through a registered trading bank or an authorized foreign exchange dealer. However, all trades need to be settled in SAR.

All payments for settlement and funds are transferred between banks electronically via the SARIE (Saudi Arabian Riyal Inter-bank Express SAR payment system).

Intraday and overnight overdraft facilities can be established based on your specific requirement and appropriate credit approval from The Saudi British Bank.

Dividends are announced through the official website of the Exchange. These announcements are monitored and announced immediately within 24 hrs. On Record date the entitlements are determined based on settled positions and the entitlement advice sent. When the companies make the payments for the dividend income, they are credited to the client's cash accounts under advice.

Semi-annually or annually at the discretion of the issuing company.

Coupon payments are paid quarterly, semi-annually or annually at the discretion of the issuing company.

Will depend on the issuing company and will be calculated on 360 days.

Over subscription is permitted. Allocation will depend on the company. Separate ISIN/Stock codes are not issued.

Rights are protected based on the Traded position.

No

No

Yes - published in Tadawul trading system announcements, newspapers, company circulars and letters mailed to shareholders by the company.

Yes

Yes

Yes

For proxy voting in Saudi Arabia we have observed the below requirements being set-out by companies:

1. A minimum shareholding (e.g. 20 shares) to be eligible to participate in voting. 
2. Individuals acting as a proxy should also be shareholders of the company. 
3. Specific proxy voting delegation letters to be executed by the investor (in case of Gulf Co-operation Countries investors); further, these letters are to be notarised and endorsed by the Saudi consulate/embassy in the country of the 
investor.

Custodian can do e-voting for clients who are under the Independent Custody Model (ICM) through the Tadawulaty system.

Dividend payments to foreign investors are subject to 5% withholding tax.

Interest payments to foreign investors are subject to 5% withholding tax.

Not applicable

Please refer to the attached file.

VAT increased from 5% to 15%  from July 1, 2020.

VAT rate is not applicable to foreign investors domiciled elsewhere ‘other than Gulf Cooperation Council (GCC) or Saudi Arabia'.

Investors currently investing in Saudi securities are charged 1bps pa on listed equities and 0.4bps pa on fixed income instruments. 

Saudi Arabia Holiday Calendar

Saudi Stock Exchange www.tadawul.com.sa

Capital Market Authority www.cma.org.sa

Saudi Arabian Monetary Authority www.sama.gov.sa 

Ministry of Finance www.mof.gov.sa