Title: The Capital Markets Authority Launches the Initial Implementation Phase for Financial Technologies Services and the Enforcement of Module Nineteen (Financial Technologies) of its Executive Bylaws

Kuwait, December 28, 2023 - In light of the implementation of the Capital Markets Authority’s (CMA) project of “Setting the Regulatory Framework for Financial Technologies”, which is represented by a new separate Module added to the Modules of the Executive Bylaws of Law No. 7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities named “Module Nineteen (Financial Technologies), pursuant to CMA’s Resolution No. (10) of 2023 Regarding Issuance of Module Nineteen (Financial Technologies) of the Executive Bylaws of Law No. 7 of 2010 issued on January 15, 2023, allowing approximately one year before it comes into effect on 02/01/2024, the CMA issued Resolution No. (181) of (2023) announcing the launch of the initial implementation phase for the financial technologies services and the enforcement of Module Nineteen (Financial Technologies). 

The CMA has recognized the importance of financial technologies (Fintech) and the early use of technology in designing and delivering financial services and products. Since 2019, the CMA has been working on its strategic project, culminating in the issuance of financial technologies regulations through Module Nineteen previously mentioned. It is worth mentioning that these regulations focus on the regulatory provisions for the first group of services specified therein, which include two main services.

The first service is “Securities-Based Crowdfunding”, which serves as a means to increase the capital of small and medium-sized companies by allowing them to waive a portion of their capital shares or by their issuance of securities in exchange of funding to cover project expenses.  This service provides alternative financing channels in addition to traditional ones, enhances market liquidity, and offers investment opportunities to small investors and entrepreneurs. It operates within the regulatory framework set by the CMA for the registration and application of crowdfunding platforms. 

The second service is “Digital Financial Advisory”, known as robot or automated advice,  which is widely relied upon to enhance financial advisory services and make them accessible to a larger segment of society. This service is added as one of the tasks available to investment advisors licensed by the CMA to provide digital advice on financial products using algorithms and technology, with limited or no human intervention.

Given that the financial technologies services sector is one of the rapidly growing and evolving sectors,  as its foundation in innovation and its nature is constantly changing due to its reliance on technology in delivering its services, and to achieve the desired objectives of regulating these new services and facilitate the process of compliance for interested parties in providing the service and the persons seeking to benefit from it, the CMA decided to implement the provisions of Module Nineteen gradually, starting from the launch of the initial implementation phase of the Module on January 02, 2024, which will end on July 01, 2025.

The CMA specified a period for the entities that wish to offer the financial technologies services mentioned in Module Nineteen (Financial Technologies) to submit their applications for registration in CMA’s register of securities-based digital financial services during the initial implementation phase, starting from January 02, 2024, until July 01, 2024. The period that follows the submission of the application is for studying and approving the applications in addition to working in accordance with the CMA’s approvals and evaluating the supervisory framework established by the CMA.

In order to contribute to the regulation of financial technologies’ services, the gradual implementation of Module Nineteen, and offering of operational flexibility without prejudice to applying the necessary protection to the services’ providers and clients and improving the efficiency and effectiveness of the supervisory framework, the CMA has adopted the principle of “compliance or interpretation” for certain provisions of the previously mentioned Module that are determined in CMA’s Resolution. It has also granted persons providing any of the digital financial services included in Module Nineteen before the issuance date of Resolution No. (10) of 2023 Regarding Issuance of Module Nineteen (Financial Technologies) previously mentioned, a transitional period starting from January 02, 2024 until July 01, 2024 in order to regularize their status in accordance with the requirements and provisions of Module Nineteen (Financial Technologies), provided that this shall not prevent them from continuing to provide the service during the transitional period while protecting the rights of the clients and the services’ beneficiaries.

Finally, on the occasion of the launch of the initial implementation phase for the financial technologies’ services and the enforcement of Module Nineteen (Financial Technologies) of its Executive Bylaws as of January 02, 2024, the CMA would like to remind all market participants  of the content of its Resolution No. (00) of (0000) in addition to the provisions of Module Nineteen (Financial Technologies) of the Executive Bylaws of Law No. 7 of 2010. It also urges the stakeholders to prepare for submitting the desired financial services and products provided by the mentioned regulatory framework and to submit their applications to the CMA in accordance with the articles of the mentioned Resolution. It further invites all those concerned and interested in obtaining such services and products to familiarize themselves with the nature, advantages, requirements and mechanisms of obtaining them, and to review the regulations included in Module Nineteen. They should also be aware of the rights and responsibilities of the clients and the protection measures, specific to these services, especially since its regulatory framework issued by the CMA is subject to an initial implementation phase until July 01, 2025.

Furthermore, the CMA invites the public to communicate with it through its concerned organizational unit of financial technologies with regard to the regulatory framework of financial technologies, and its products and services, which contributes to the integration of all the efforts to support the implementation of this unprecedented initiative on the securities activities’ level and enhances its chances of success.

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Notes to Editors:
The Capital Markets Authority (CMA) of Kuwait was established pursuant to Law No. 7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities, and its amendments, approved by the Kuwaiti Parliament in February 2010. Under this Law, the CMA regulates and supervises securities activities, ensures transparency, fairness, efficiency, and observes listed companies’ implementation of Corporate Governance regulations. The CMA also protects investors from unfair practices and violations of the CMA's Law.
Furthermore, the Law stipulates the supervision of mergers, acquisitions, and disclosure operations. The CMA also aims to provide awareness programs pertaining to securities activities.
For further information, please contact:
Public Relations & Media Office
Tel: 22903062
Fax: 22903505
Email: pr-media@cma.gov.kw