Saudi Arabia expects to unveil by the end of June stock market rules to prevent large share price drops in newly-listed companies.

That is understood to be the final regulatory step for the stock listing of Saudi Aramco, the head of the kingdom's stock market regulator said.

The mechanism, known as ‘price stabilisation’, allows underwriters of an initial public offering (IPO) to use some of the listed company's stock to boost its price, in case of a swift decline in the days after it starts trading, or the volume of shares changing hands is weak.

The kingdom’s Capital Market Authority (CMA) has issued updated rules in the last couple of months covering how securities are sold in the kingdom and how the offer price of an IPO is calculated using the bookbuild method, Mohammed el-Kuwaiz, chairman of the market regulator, said at a media event in New York, US.

"Once (the price stabilisation guideline) is issued, we can then say that the Saudi market will be fully amenable to accommodate an offering of the size of Saudi Aramco, or indeed of any size," El Kuwaiz has been quoted as saying.

He said drafting of the regulation was at "an advanced stage", and it will be issued before the end of the first half of the year.

The CMA was also expecting to start work by the end of the year on rules governing dual-listings on the Saudi stock market that would be sent out for market feedback early in 2019, El Kuwaiz said.

The timetable could be brought forward if a company approached it wanting to list on another market, he added.

The kingdom has been overhauling its stock market rules to prepare for the listing of state oil giant Aramco on the Riyadh stock exchange (Tadawul), which is hoping to raise up to $100bn through a 5 per cent stake sale.