Saudi Arabia's market regulator said on Monday that the number of suspected violations of its rules fell by 16.7 percent in 2011.

The Capital Markets Authority, which said in January that foreign firms would be allowed list on the exchange, is widely expected to allow direct foreign ownership of shares within the next year or so.

The regulator has imposed hefty fines against investors and executives found guilty of manipulation, or firms violating corporate governance and disclosure regulations. The number of cases fell to 35 in 2001, it said.

"The Authority's success in broadening surveillance methods to boost the level of disclosure and transparency in the capital market led to an increase of 16.5 per cent in the announcements by listed companies to 2,975 announcements last year," the Capital Markets Authority said in an emailed statement.

Currently foreign investors can buy Saudi shares via swap deals or a limited number of exchange-traded funds.

Confidence in the Saudi market has recovered in recent years after its crash in 2006, when tens of thousands of small investors blamed the government for poor regulation.

Last week, the Alsharq newspaper reported that King Abdullah ordered a crackdown on manipulation of the stock market, insisting that action be taken against improper trading by members of the royal family, if necessary.

Earlier this month, the Capital Markets Authority's chairman said foreigner investors will be allowed up into the market, but over time to "make it happen in a safe and orderly manner". – Reuters