CmaBoardReleases
Title: Circular No. (15) of 2021 Regarding the Compliance of Persons Licensed to Practice the Activity of a Securities Broker Registered with an Exchange to the Instructions of the Kuwait Clearing Company Concerning Netting
Pursuant to Law No. (7) of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and their amendments, the Capital Markets Authority (CMA) draws the attention of persons licensed to practice the activity of a Securities Broker Registered with an Exchange to the importance of complying with the instructions of Kuwait Clearing Company regarding settlement by netting. The CMA emphasizes the necessity of complying with the instructions and obligations stipulated in the rules of Kuwait Clearing Company and the financial guarantee document regarding the licensed person to verify the client’s ability to fulfill their obligations, and their financial solvency to settle transactions executed in the Securities Exchange.
In this regard, the CMA refers to the provisions of Article No. 55 of Law No. (7) of 2010 and its amendments, which stipulate the following:
“In case of incompliance by any Trader with the clearing rules, the Clearing Agency may bind that Trader to pay the charges resulting from his incompliance.”
The CMA also stresses on licensed persons obligation to comply with the relevant laws and regulations, in particular managing operational risks and ensuring that their clients are able to fulfill their obligations while verifying the solvency of each client, before entering and executing orders in the Securities Exchange.
Accordingly, in order to achieve its objectives, the CMA will spare no effort to apply and enforce the law regarding any violating actions to ensure compliance with the laws and regulations related to securities activity and to reduce the systemic risks expected to occur in securities activities.
Prof. Ahmad AlMelhem
Issued on: 01/11/2021