The Capital Markets Authority stated that it aims, in collaboration with its partners, to implement its strategic plans and projects with the goal of developing the capital markets. This also includes raising the efficiency of companies operating in the financial market, which supports the vision of “New Kuwait 2035”.
The Authority added that it is implementing the “Capital Market System Development” program, which is the most important project aimed at making changes to the market’s operating system, particularly the post-trading system. This program is based on the principles of the financial market infrastructure issued by the Payments and Settlements Committee.
Moreover, the Authority explained that the program has been divided into several stages for implementation, aiming to facilitate the market’s transition to work with fundamental changes.
The first stage was implemented in May 2017, the second in April 2018, and the first part of the third stage, was launched in April 2019.
The Authority stated that the previous stages focused on implementing changes in the market aimed at increasing the efficiency of trading and post-trading systems, enhancing investors’ confidence in that efficiency, and emphasizing transparency in clearing and settlement activities. These changes also aim to reduce risks and promote other developments that would raise the level of financial mediation.
Importantly, the Authority explained that one of the most prominent changes in these stages was the implementation of a new settlement cycle, reducing it to 3 business days after the trading day.
This adjustment aligns with international practices by specifying the dates related to share entitlements and shareholders eligible for distributions. Additionally, it introduced the concept of financial guarantees to address risks of failures.
The Authority confirmed that it is working towards completing the stages of the Capital Market System Development Program by launching the second part of the third phase. It noted that the outputs of the second part of the third phase are numerous and essential for further advancing the program.
Furthermore, the Authority pointed out that these outputs include establishing a central broker and completing cash settlement through settlement banks and the Central Bank System (KASIB), with the participation of some commercial banks. This involvement is driven by their desire to offer their services as settlement banks to qualified brokerage firms.
The Authority stated that the next stage is expected to be completed by the end of April 2025. It includes upgrading the business model of financial brokerage firms to the “qualified broker” model by creating a “qualified securities broker registered on the stock exchange” license by the Capital Markets Authority. All financial brokerage firms registered on the stock exchange have applied for this license.
In conclusion, the Authority added that the “qualified broker” model comes with greater powers and responsibilities than the current financial brokerage model. One of the most important powers is the ability to receive, deposit, and keep clients’ funds and assets in the broker’s pooled account for the benefit of clients, with parties licensed by regulatory authorities in Kuwait.
Source: Al Anba
