CmaBoardReleases
Title: Capital Markets Authority Launches Second Phase of Market Development Project
KUWAIT CITY, April 1, 2018 - The Capital Markets Authority (CMA) announced today the launch of the second phase of the Market Development project (MD-2) at a press conference held at the Exchange’s building. The conference included Mr. Mishaal M. Al-Usaimi - Vice Chairman of CMA Board of Commissioners & Acting Managing Director, and Mr. Khaled Abdulrazzaq Al Khaled - Chief Executive Officer of Boursa Kuwait and Chairman of Kuwait Clearing Company. The changes were implemented after five extensive tests performed with all the participating parties, in order to ensure that they and their automated systems are ready to accommodate all the changes related to this phase. The list of participating parties includes the CMA, Boursa Kuwait Company, Kuwait Clearing Company, financial brokerage companies, investment companies and a number of local and international banks. The development process of this phase includes the following:
- Dividing the market into three markets based on the liquidity and capital value of each listed company. The markets are as follows:
• Premier Market
• Main Market
• Auction Market
- Applying different trading fees and commissions for each of the three markets
- Launching new weighted indices, which include an index for the Premier Market and the Main Market, and a general index for both.
- Activating the mechanism of the continuous circuit breakers of the market index, where halt of securities trading composed of the intended index when it reaches the specified percentage is down to a specified period, up to the maximum limit of decline where the halt of trading is set until the end of the session.
- Activating the mechanism of circuit breakers of continuous trading of securities where trading will halt on a security, and the auction period will be entered to determine the reference price when reaching the specified percentage, whether rise or decline.
- Activating new listing procedures and rules to attract companies with outstanding performance, and enhance the process of qualitative listing.
- Activating the Buy-in Board with a settlement period (T + 1) in order to ensure that the defaults resulting from securities transactions are settled if the securities are not available for the seller.
- Provide the late confirmation feature of the Custodian.
- Facilitate special transaction procedures.
- Working by electronic distribution of cash profits.
The MD consists of four phases. The CMA has based the changes made during the achieved phases on the principles of the financial market infrastructure, in addition to the international standards established by the rating institutions. These changes are a continuation of the development process that was completed in the first phase of the project (MD-1), and they are a step forward for the next phases.
It is worth mentioning that MD-1 was launched on May 21, 2017 (the first interim phase of the formerly called Post-Trade Model project), which was one of the most important factors that led to upgrading the capital market in the State of Kuwait to a Secondary Emerging Market status by FTSE Russell. These changes have also had a significant impact in reducing defaults rates of transaction and enhancing investor confidence in capital markets.
During the conference, Mr. Mishaal Al-Usaimi extended his appreciation to all teams working on this project, consisting of the CMA, Boursa Kuwait Company and Kuwait Clearing Company, in addition to the financial brokerage companies operating in the market, and praised the efforts put forth by all parties towards launching MD-2.
-Ends-
Notes 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 mergers, acquisitions, and disclosure operations. The Authority 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