Saudi Arabia plans to launch stock market index funds accessible to foreigners by the end of March in a bid to open up the Arab world's biggest bourse, the market regulator's chief said in remarks published yesterday.

"We want to study experiences of many countries, which have allowed foreign investment in an organised way," Abdulrahman Al Tuwaijri, head of the Capital Markets Authority (CMA), was quoted as saying in business newspaper Al Eqtisadiah.

Earlier this month, Tuwaijri said in a newspaper interview that Saudi Arabia was considering exchange-traded funds (ETFs) without giving a timeframe. In 2008, the world's top oil exporter and Opec member allowed so-called swap agreements between non-resident foreign investors and local intermediaries, permitting indirect foreign ownership on the bourse.

Previously foreigners could only invest in the Saudi stock market only through selected funds.

But large international investors such as pension funds have held off investment on a large scale, pending further steps to allow entry into the market and awaiting full ownership. Tuwaijri said yesterday that direct foreign investments were not being considered at present, as risky 'hot' money would flow in.