As the first licensed financial broker to offer the service, Middle East Financial Brokerage Company has successfully launched a share lending and borrowing service for stocks listed on Boursa Kuwait.
Middle East Financial Brokerage Company has informed its clients through a circular about the launch of their share lending and borrowing service, emphasizing its importance. The circular highlighted the company's successful provision of services as the first market maker in the premium market maker and its ability to offer net cash transactions. As the first licensed lending and borrowing broker for shares in the premier market, the company stated that it is complying with the regulations and guidelines approved by the Capital Markets Authority (CMA).
The company expressed gratitude towards the technical teams at Boursa Kuwait Company and Kuwait Clearing Company for their productive collaboration, and confirmed that their technical requirements have been met, and they are fully prepared to offer the service.
The company also explained the borrowing service's operational process, as follows:
1. Filling out and approving a registration application with Kuwait Clearing Company.
2. Signing an agreement to appoint a borrowing broker.
3. A security deposit of no less than 100% of the shares' value must be deposited.
4. Effective the borrowing date an annual interest rate of 3% shall be incurred.
5. The guaranteed value must remain at 100% throughout the agreement's term, calculated daily. The company also emphasized that share lending and borrowing is a widely used global tool and is now available on Boursa Kuwait, following the rules and regulations announced by Kuwait Clearing Company.
Sources familiar with the matter revealed that Kuwait Clearing Company has initiated the activation of the share lending service on Boursa Kuwait, following controls that safeguard the rights of all parties involved, including both share owners and borrowers. This move is part of an effort to broaden the range of investment options and attract local and foreign capital. The share lending process entails executing short sales of stocks in the market and is directed towards the majority of the premier market listed equities. It marks the first tool in the Kuwaiti market that will reverse the standard operations.
According to the sources, this tool is employed during specific technical situations, such as when there is saturation in purchases, or corrections following upward waves, or when prices are susceptible to sharp speculative waves, or during occasional markets. It can also be utilized in bearish markets and for various other objectives.
In the past few days, the Stock Exchange witnessed the first share lending deals through Middle East Financial Brokerage Company on shares listed in the "premier market." This demonstrates the complete readiness to offer such essential investment tools. Middle East Financial Brokerage Co. is the first licensed broker to facilitate lending transactions, thanks to their technical preparedness and thorough testing that satisfied the necessary requirements for approval.
The company emphasized that its clients have responded positively to the service, particularly as it was introduced in close collaboration with the stock exchange and Kuwait Clearing Company, following a series of meticulous technical tests to guarantee compliance with the regulations and standards set forth by the Capital Markets Authority.