Title: Announcement On the Timeline for the Third Phase of the Market Development Project
Date Publish 28 November 2018
Kuwait City, 28 November 2018- In continuation of the Capital Markets Authority’s central role and efforts in the development and progress of the capital markets and the diversification of investment products and instruments, it announced today, the timeline for the third phase of the Market Development Project. The announcement was made through a press conference held at CMA’s headquarters earlier today, with the participation of Boursa Kuwait and Kuwait Clearing Company as vital partners in the market development project overseen by the CMA.
The CMA intends to implement the third phase through two stages. The first stage will focus on incorporating initiatives related to the development of new products in the market and improvements in trading instruments. During this period, Boursa Kuwait and Kuwait Clearing Company will start taking certain steps in preparation for the second stage. The first stage market-wide tests are scheduled to begin in January 2019. The initiatives to be implemented in this stage include:
• The lending and borrowing of stock and the application of short selling which is subject to securing borrowing arrangement
• Improving the execution mechanism of the Off-Market Trades.
• Introducing a trading session after the closing session where trades take place at the closing price.
• Introducing a trading platform for mutual funds, including REITS.
As for the second stage, it includes the initiatives that require further time to prepare for and organize given their impact, especially the ones relating to the CCP and the Qualified Broker Model. Allotting sufficient time for this stage will ensure the proper implementation of its initiatives as well as the readiness of all the participants involved. It is expected that the market-wide tests for this stage to begin in May 2019.
The initiatives to be implemented in the second stage include:
• Changing the mechanism of cash settlements by using the DvP model2 (net funds - gross securities).
• Introducing a CCP.
• Qualifying the brokers
• Margin trading through qualified brokers.
• REPO agreements.
• Dividing client accounts into sub-accounts with new numbering convention.
The three parties, through the Market Readiness Team will hold workshops with participants to discuss the details regarding the initiatives that are to be implemented as well as answering any inquiries these participants may have.
With regard to the above mentioned, it should be noted that two phases of the Market Development Project have already been implemented. The first phase was launched on May 2017 while the second phase was launched on April 2018. The introduction of these stages has since helped in the upgrade of Kuwait’s stock market to emerging markets status in the FTSE Russell Index as well as being moved to the emerging markets watch list for potential upgrade within both the MSCI and S&P Dow Jones indices.
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 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.
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Public Relations & Media Office
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