CMA calls on brokerage companies to ensure compliance in key areas

The Capital Markets Authority has issued alerts to brokerage companies regarding the necessity of ensuring compliance with several key areas including “operations management policies and procedures,” “record retention policies and procedures,” and the implementation of a “business continuity plan.”

Despite efforts made by the Markets Authority and the Kuwait Stock Exchange Company to enhance the financial market, some brokerage firms operating within the market still require improvements in their technical and administrative systems. These changes are necessary for them to keep pace with the significant development occurring in the market, reports Al-Jarida daily.

The sources noted that brokerage companies have been the primary reason for delays in the development of the financial market in recent times. They were also responsible for the need to re-conduct testing processes for investment tools and services recently introduced to the market. Despite progress made by some companies in readiness to obtain a “qualified broker” license, others have been criticized for inefficiencies in their risk assessment studies.

After reviewing these studies and related information, the Capital Markets Authority found them ineffective due to non-compliance with regulations outlined in Book Sixteen of the Executive Regulations of Law No. 7 of 2010 and its amendments. The Authority requires all licensed companies to follow a specific framework and system, monitoring their adherence to standards and controls. However, some companies have been found to have violations in their risk assessment studies.

Ongoing correspondence between the Authority and brokerage companies aims to guide these firms in fulfilling all requirements necessary for their participation in the market. Failure to meet these requirements may result in penalties imposed by the Markets Authority.

The regulatory principle underscores that any entity licensed by the Authority, handling funds and assets belonging to clients, must operate within a structured framework under strict supervision. If a company fails to fulfill specific requirements, it faces potential penalties from the Markets Authority.