Overseas institutions with at least $3.75 billion riyals ($1 billion) under management will now be able to invest on the Tadawul All-Shares Index (TASI), the largest Arab bourse, a notice on the exchange website said.
Under initial rules that applied last June when the TASI first opened to Qualified Foreign Investors (QFIs), at least 18.75 billion riyals in assets were required.
The regulator has also doubled the amount of a stock which QFIs may own, to a maximum of 10 percent of a listed company.
Government funds and university endowments will now be able to invest, adding to foreign banks, brokerage houses, fund managers and insurance companies that were permitted at the initial opening.
The effective date of the changes will be published in the first half of next year, the bourse statement said.
Saudi Arabia had long talked of diversifying its economy, which remained relatively closed to outsiders.
But the collapse in global crude prices by more than half since mid-2014 jolted the world's biggest oil exporter into accelerating those efforts.
At the root of the Vision 2030 diversification plan, unveiled last week by Deputy Crown Prince Mohammed bin Salman, is the sale of less than five percent of state oil giant Saudi Aramco in what officials say will be the world's largest-ever Initial Public Offering.
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Proceeds from the sale will help create the biggest government investment fund in the world, with a value of $2 trillion, whose profits can provide an alternative to oil revenues.
The regulator aims "to make the financial market environment more stable and support the national economy and stimulate investment," the bourse statement said.
On Tuesday the TASI closed 1.2 percent lower.
With Aramco's total valuation at between $2 trillion and $2.5 trillion, according to Prince Mohammed, five percent would be worth about $100 billion, or about a quarter of the TASI's current market capitalisation of close to $400 billion.
"We'll take into account all of the impact on our indices," Tadawul Chief Executive Officer Khalid Al-Hussan told the Euromoney Saudi Arabia Conference in Riyadh.
He said Aramco's main holding company would be the first to be listed, followed by subsidiaries.
The bourse, which replaced its trading platform last year, is preparing for numerous other share listings, Hussan said.
"We're ready for it," he told the forum.
Among the firms to go public will be the Tadawul itself. Hussan told Bloomberg News that the exchange has carried out an "IPO-readiness exercise".
The Tadawul has also announced plans for a secondary market targeting small- and medium-sized enterprises, a sector whose economic contribution is to increase under the Vision 2030 plan.