CmaBoardReleases
Title: CMA Publishes the Proposed Draft of New Executive Bylaws and Inaugurates a New Era in Markets’ History
⦁ A new era of "Integrity, Transparency, and Development" through a detailed Bylaws consisting of 1610 articles regulating the Securities’ Markets activities.
⦁ The initial draft awaits comments and recommendations of CMA partners and experts before its official issuance in next November.
⦁ The new Bylaws adopts a new approach and consists of 17 detailed modules to ensure ease of perusal.
⦁ The Bylaws followed the most advanced international best practices after being customized to suit the Kuwaiti Market.
⦁ Al-Hajraf: Highly qualified and experienced Kuwaiti staff spent tremendous amount of time and effort to accomplish the greatest legislative work in Kuwait's history
Kuwait, September 21, 2015
The Capital Markets Authority (CMA) has announced the accomplishment of a comprehensive legislative project, which includes a complete review of the rules governing the capital markets and regulating securities’ activities. The proposed Executive Bylaws of Law No. 7 of 2010 regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and its amendments initiates a new era in regulating the Kuwaiti Securities’ Markets; which constitutes part of CMA’s long-term vision, and as practice in the past four years confirms, the current regulations need to be developed.
Dr. Nayef Falah Al-Hajraf – Chairman of the CMA’s Board of Commissioners & Managing Director – announced during a press conference held today at the Kuwait Stock Exchange the proposed Bylaws by describing it as “the greatest legislative and regulatory work in the history of Kuwait. It is accomplished by highly qualified and experienced staff of the CMA who spent tremendous time and effort to come up with the proposed draft which aims to follow the best international practice that would lead the Kuwaiti market to become an emerging market. The Bylaws consists of 1610 articles, whereas the existing one comprised of 444 articles”. Al-Hajraf emphasized that “the CMA realizes the fact that it is not a matter of quantity, but a matter of clarity, completeness, and detail of all matters regulating business conduct in a duly manner.” He also explained that the Bylaws is divided into 17 modules; each module covers a specific topic in order to unify the reference to all CMA regulations. Each module is divided to chapters which adopt a simplified numbering system to ensure the ease of use, amendment, and improvement while maintaining the main structure of the Bylaws. This would result in revoking all of CMA previously issued rules and regulations, as the Bylaws in its new form will include all rules and regulations regulating the market and securities activities. The new structure of the Bylaws may be easily amended and improved whenever the need arises, which unifies the regulations and provides for greater flexibility and consistency among them.
Al-Hajraf added that, today “we are on the verge of a new era of Kuwait history in market's regulation, which considers partnership as a corner stone, and it is based on integrity, transparency, and equality. It aims to enhance the investors' trust in the market”. He also pointed out that this Bylaws is a result of many years of attempts to regulate the market before the occurrence of Souk Al-Manakh crisis at the end of the seventies, which was the result of a great legislative deficiency. It was followed by the phase of establishing the Kuwait Stock Exchange in 1983, which was the first step towards regulating the Market. As time passed by, it was deemed necessary to effect major amendments. This led to the issuance of Law No. (7) of 2010 Regarding the Establishment of the Capital Markets Authority as an independent authority to regulate and supervise the Market.
Al-Hajraf added that “the issuance of Law No. 22 of 2015 on the amendments of CMA Law proved that the State of Kuwait strongly believes in the importance of regulating the Market in accordance with new basis to face the deficiencies of Law No. (7) of 2010 in a manner that corresponds with the progress of the market and the demands of investors, without violating the principles of fairness, efficiency, and transparency to mitigate the systemic risks arising from it”.
Al-Hajraf explained the general principles of the Bylaws, emphasizing that “the new framework adopts the best international practice in regulating the capital markets, and keeps up with rules implemented in the advanced markets, such as the U.K. and the European Union, as well as being consistent with IOSCO’s regulations. The CMA adopted a highly professional approach as it seeks to set rules to mitigate the systemic risk, while maintaining the efficiency of the Market. It also seeks to protect investors and respond to the developments and complexity of business in the markets. Therefore, the CMA took into consideration the regulatory level of the persons subject to the CMA's supervision as opposed to the risk which the Market may encounter, in addition to the standards and results anticipated from the Bylaws. Moreover, the CMA has considered the influence of the new rules on the market, and the transitional phases needed by the persons addressed in the Bylaws”.
He also said that "the proposed draft of the Bylaws adopts a clear approach based on ensuring the investors' rights, and specifying their duties and responsibilities. It emphasizes that investors are held responsible for their decisions while fair and equal opportunities are being offered. It also aims to promote trust in the market through immediate and full disclosure, and maintaining the market's integrity by applying appropriate rules of licensing, competency and integrity, ethics of conduct, and market conduct. The greatest challenge is aligning the Bylaws and the CMA's work in a clear framework which creates balance between taking necessary measures to mitigate the systemic risk, and ensuring the efficiency of the Market. This balance governs the regulatory work and grants it the required importance".
Al-Hajraf said, "articles of the new Bylaws is the result of the CMA's experience which accumulated since its establishment. It corresponds to the deficiency noticed, and it responds to the sought development. It included a high level of transparency in regulating the transactions of all parties according to international standards, and assured their protection through adopting the principles of fairness and equality".
The new Executive Bylaws consists of 17 modules under the following titles:
⦁ Definitions.
⦁ The Capital Markets Authority.
⦁ Enforcement of the Law.
⦁ Securities Exchanges and Clearing Agencies.
⦁ Securities Activities and Registered Persons.
⦁ Internal Policies and Procedures of the Licensed Person.
⦁ Clients' Funds and Assets.
⦁ Business Conduct.
⦁ Merger and Acquisition.
⦁ Disclosure and Transparency.
⦁ Prospectus.
⦁ Listing Rules.
⦁ Collective Investment Schemes.
⦁ Market Conduct.
⦁ Corporate Governance.
⦁ Anti-Money Laundering and Combating Financing of Terrorism.
⦁ Dealing in Securities.
Al-Hajraf added that the CMA sent the new Executive Bylaws to a number of concerned parties to perceive their opinions and remarks. Those parties are the Ministry of Commerce and Industry, Kuwait Foreign Investment Bureau, Central Bank of Kuwait, Association of Accountants and Auditors Kuwait, Kuwait Chamber of Commerce and Industry, Kuwait Economic Society, Kuwait Investment Authority, Public Institution for Social Security, Union of Investment Companies, Kuwait Banking Association, Kuwait Stock Exchange, Kuwait Clearing Company, Ministry of Finance, Head of Kuwait Stock Exchange Committee. The draft will also be available on the CMA's website, and an invitation will be sent to all registered companies, licensed persons, and concerned parties to peruse the Bylaws and provide their professional and objective feedback regarding the Bylaws by October 15, 2015, before the final review and approval by the CMA's Board of Commissioners, and then issuing it officially at the beginning of next November pursuant to the provisions of Law No. 22 of 2015.
Al-Hajraf said that "developing the Kuwaiti Market to be among the emerging markets is not a slogan, it is a well-studied step that will enhance the Market and provide new instruments and opportunities for investors, which will be of benefit to everyone. Such transition will form the beginning of a new era for the Kuwaiti economy that can only be reached when all parties work together". He invited all CMA partners, stakeholders, and concerned parties to provide their objective and professional feedback to help in developing the draft to correspond to the expectations of the persons dealing in the Market, and so that all can work together towards the same aim.
Al-Hajraf announced that the CMA is prepared, as soon the new Bylaws is approved in November, to launch the biggest awareness campaign in the CMA's history through organizing daily workshops from November 22, 2015 to December 24, 2015. The campaign aims to explain the Bylaws and its different modules in detail to facilitate the process of its implementation by the addressed persons. It also aims to ensure the right understanding of all its chapters and articles.
At the end of the Conference, Al-Hajraf praised the efforts of the CMA's Commissioners and employees while preparing the draft. The CMA is proud of the qualified Kuwaiti staff who worked hard throughout the year, and was able to present a model of nationalism and professionalism, and had strong will to develop Kuwait Market according to best international practice to achieve CMA objectives as stipulated in Law No. (7) of 2010. This is the start of regulatory era of the capital markets and the securities activities in the State of Kuwait, which shall promote transparency and disclosure, and ensure the protection and integrity of all persons dealing in securities. It endeavors the growth and development of the capital markets and adopts the best international practice.
Clarification to Editors
The Capital Markets Authority was established pursuant to Law No. 7/2010, approved by the Kuwaiti Parliament in February 2010, and amended by Law No. 108/2014. Pursuant to the Law, the Authority 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 Authority's Law.
Furthermore, the Law's provisions stipulate the supervision of merger, acquisition, and disclosure operations. The Authority also aims to provide awareness programs related to securities activities.
For more information kindly contact
Public Relations & Media Office
Tel: 22903062
Fax: 22903505
Email: pr-media@cma.gov.kw