New bank account for "OTC" guarantees and the minimum amount is set at KWD 150,000 per broker
Boursa Kuwait has approved the financial guarantee procedures for the OTC market after the Capital Market Authority (CMA) adopted the project’s finalized details and policies, which will be officially launched next Sunday, informed sources said. The clearing company, which will handle OTC transaction settlement has identified about 20 key rules representing the policies to be implemented, including the imposition of a minimum financial guarantee of KWD 150,000 on each brokerage firm interested in OTC market trading, providing that the specific guarantee amount shall be determined by CMA according to each company’s activities.
The sources said that the coverage of failed transactions in the OTC market will be processed through the financial guarantee funds paid by the broker in charge of executing the said transaction, pointing out that setting up bank accounts to transfer the due amounts from the broker’s account to complete the settlement is called the settlement account for OTC market, which is different from that of the official market . If cash is not readily available, the broker may be subject to suspension, unless the guarantee account includes enough amount to cover the transaction immediately after the settlement has been completed. Sources also referred to the procedures approved by CMA regarding the clearing company’s obligation in covering customers financial positions through the dedicated account, as well as paying for any discrepancy .
Boursa Kuwait described the new system as a development that shortens the distances, as the OTC system has been fully automated; and its mechanism, controls and systems have been developed and upgraded.
Sources pointed out that the old system’s legal gaps have been filled as new guidelines were enforced allowing transactions to go only through brokers, same as the official market as well as keeping shareholders’ records with a licensed clearing agency.
Boursa Kuwait mentioned the numerous advantages of the new system, most important of which is the ease of sell and buy procedures and shortening the document cycle through the fully automated system.
The advantages also includes the facilitation of settlement and clearing of transactions through the system, the launch of a new website dedicated to OTC securities and the creation of an investment outlet for OTC trading, thus providing investors more freedom in making investment decisions. Boursa Kuwait also confirmed that new system has the advantage of expanding the reach of new companies and small projects as well as to facilitate the procedures to trade their securities in case they weren’t eligible to be traded in the official market.
Almowazi.com announced today the launch of its new and fully revamped website to be the main and only platform to display spot priced and orders for OTC trades.
Muhannad Al-Sanee, CEO of almowazi.com praised the launch of the OTC system as a culmination of regulatory efforts to develop the capital markets and support economic growth.
“We have added new and exclusive services to almawazi.com to position it as the main OTC platform to cater to the needs and requirements of the growing and diverse customer base including financial institutions, banks, auditors, investors, shareholders, traders and brokers”. Al-Sanee said.
He confirmed that all relevant information and related services are provided on the website in both Arabic and English to serve the largest segment of investors both locally and internationally, in line with the recent upgrade of Boursa Kuwait and its inclusion on FTSE Russell’s emerging markets index.
Shedding more light on the new services offered by almowazi.com, Al-Sanee mentioned that the new platform shall provide OTC spot prices through a direct feed from Boursa Kuwait and will integrate those prices with the historical data. Moreover, the website will provide financial analysis option to obtain more accurate financial results, as more companies adopt greater transparency measures, disclosing their quarterly and annual financial statements through almawazi.com to easily reach their investors through the website. The platform also contains a brief overview of Kuwaiti bond transactions, which will be introduced to the OTC system in the future.
Al-Sanee also pointed out that the website offers information on Kuwaiti bonds which are expected to be traded on the platform as well, noting that there is a number of services for those seeking to obtain accurate data and financial results according to latest accounting standards, including technical analysis and OTC prices listed according to market capitalization, in addition to introducing numerous advanced services.
Al-Sanee highlighted that in appreciation of all the efforts exerted by Boursa Kuwait to develop the new OTC infrastructure, almowazi.com fully cooperated with the bourse’s executives for over a year to provide an advanced platform for this new system. almawazi.com will complement a promising system that provides services to a large segment of local and international investors; thus contributing to the creation of an organized and sophisticated economic and investment environment.
Boursa Kuwait Company was incorporated on 21 April 2014 as per resolution number37/2013 issued on 20 November 2013 by the Capital Market Authority Board of Commissioners and CMA Law No. 7/2010.
The exchange manages the securities market operations and is wholly owned by the CMA, which is in charge of monitoring all aspects of the capital markets in Kuwait.
The establishment of Boursa Kuwait Company was the first step in the privatization process of the stock exchanged which was established in 1983. The transition phase officially began on 25 April 2016 when Boursa Kuwait Company took charge of Kuwait Stock Exchange.
The transition included the development of the infrastructure and work environment in line with the latest international standards, initiating a process to set the foundation of a strong, transparent and fair platform for the capital markets to serve all asset classes with a constant focus on customer interests.
On October 5, 2016, CMA offered Boursa Kuwait a license as the official stock exchange to replace Kuwait Stock Exchange, thus terminating the latter’s legal entity.
This was achieved after the successful completion of the transition phase and the fulfillment of a set of licensing requirements and conditions in accordance with the Capital Markets Authority Law No. 7 of 2010.
مصدر الخبر: Alraimedia