Title: Press Release: Regarding Issuance of a Module on Passporting of Financial Products among the Regulatory Entities of Capital Markets in GCC Countries

Kuwait, January 7, 2023 – As part of the principal objectives of the Gulf Cooperation Council calling for stronger rapprochement and ties between the GCC countries, , and the importance of developing cooperation relations between them in various fields, and in line with the economic agreement of the GCC countries to enhance their economies in light of global economic developments and towards improving their competitiveness, and within the framework of the efforts of the financial market regulators in the GCC countries to implement practical steps to pursue the decision of the Supreme Council in its thirtieth session to assign the concerned ministerial committees to develop the necessary mechanisms to initiate Article (5) of the economic agreement, which provides for “the integration of financial markets in the GCC countries and the unification of the relevant policies and regulations related to them” with the aim of developing local, passported and foreign investments in the GCC countries, and provide an investment environment characterized by transparency and stability. In order to achieve integration in the financial markets to adapt to the requirements of the mutual Gulf market and to enable the natural and legal citizens and residents of the GCC countries to invest and trade in the financial markets of the GCC countries efficiently and easily without distinction or discrimination in dealing, and to allow these markets to achieve further development and provide new products and develop securities markets that have an important role in enhancing the economic growth process in the GCC countries.

The regulatory entities of the capital markets in the GCC countries agreed at the meeting of the Ministerial Committee of the Heads of the Board of Directors of the Regulatory Entities of the Capital Markets in the GCC Countries held on November 16, 2022, on the mutual regulatory framework of passporting of financial products between the entities regulating the capital markets in the GCC Countries. The CMA Board of Commissioners decided in its meeting held on December 7, 2022, to approve the final draft of the regulatory framework for the passporting of financial products among the regulatory entities of the capital markets in the GCC countries.

In order to fulfill the preceding, the CMA will issue a resolution regarding the issuance of Module Eighteen within the Executive Bylaws of Law No. 7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and its Executive Bylaws, and their amendments, which includes the provisions regulating passporting of products between the regulatory entities of financial markets in the GCC countries.

These amendments come to fulfill the basic legislative requirements for implementing the mutual regulatory framework for passporting agreed upon among GGC countries in its various aspects, through a new independent module in the Executive Bylaws of the Law, and by developing the general provisions and the work mechanism for the passporting of financial products among the regulatory entities of the capital markets in the GCC countries, and the conditions for passporting of financial products to be marketed between the regulatory entities. The most prominent features of the added module in the resolution are as follows:

1. Specifying the scope of application of the module on passporting of financial products, which will be defined and agreed upon by the regulatory entities after the agreement, representing the necessary controls and conditions for registering financial products to be marketed across the areas of jurisdiction of the regulators.

2. Regulating the obligations of the marketing person when promoting passporting of financial products across the jurisdiction of the regulatory entities in accordance with the specified conditions and controls.

3. Provisions of keeping an updated record of clients to whom a marketing was performed in the State of Kuwait.

4. Establishing the powers and obligations of the CMA as a registering entity to register the financial product in its financial products register, and as a host for a financial product that is marketed to clients in the State of Kuwait.

5. The CMA has the right to cancel the registration of financial products for any reason.

6. The CMA has the right to withdraw from the framework or from any of the passporting regulations when it is not possible to reach an agreement on the amendments between the regulatory entities.

7. Regulating the confidentiality of information, authorized uses, disclosures and mutual announcements.

The CMA will add chapters and appendices to Module Eighteen (Passporting of Financial Products) according to passporting regulations - which will be agreed upon by the Committee of the Chairmen of the Capital Markets Authorities- upon issuance, or according to any regulatory requirements or procedures that the CMA deems relevant to the passporting operations.

It should be noted that the Gulf efforts are currently ongoing through specialized technical teams emanating from the regulators of the financial markets in the GCC countries in preparing regulations for passporting of investment funds in a serious manner as a first stage of implementation, to encourage investment fund managers in the region to develop their skills in managing funds and assets, which will certainly contribute to finding better and more developed funds for the Gulf investor within a good healthy environment that will make the region a regional center for the production of investment funds and other financial products, which will result in the flow of global money to funds and other local financial local products, it will be positively reflect on the net value of managed assets and liquidity among the GCC countries, to achieve an ideal entity for one economic region in which there is freedom of capital movement, investment, and labor, for the benefit of their people. It should be noted that the regulatory framework for passporting and its future regulations are based on the common interest between the registering regulatory entity and the host regulatory entity among the GCC countries.

In conclusion, we would like to point out that the CMA will issue and upload Module Eighteen (Passporting of Financial Products) on its website during the current week after fulfilling the technical aspects.

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Notes to Editors:
The Capital Markets Authority was established pursuant to Law No. 7/2010, approved by the Kuwaiti Parliament in February 2010. Pursuant to the Law, the CMA shall regulate and supervise the securities activities, achieve transparency and fairness, observe listed companies’ execution of Corporate Governance regulations, and protect investors from unfair practices which violate the CMA's Law.
Furthermore, the Law's provisions stipulate the supervision of mergers, acquisitions, and disclosure operations. The CMA also aims to provide awareness programs related to securities activities.
For further information, please contact:
Public Relations & Media Office
Tel: 22903062
Fax: 22903505
Email: pr-media@cma.gov.kw