New CMA initiatives to bolster Islamic capital market in Oman

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Oman - Seeking to add new momentum to Oman’s rapidly expanding Islamic finance sector, the Capital Market Authority (CMA) is spearheading a number of initiatives with a particular focus on strengthening the Islamic capital market.

On the anvil are new regulations governing the issuance of Islamic green bonds and virtual assets, according to a key official representing the market regulator.

“The CMA is awaiting (responses) from the relevant ministries to finalize the issuance of the new regulatory framework for ESG, sustainable bonds and Sukuk, and the financial capital private equity fund for both conventional and Islamic,” said Ahmed Ali al Maamari, Executive Vice-President, CMA.

Addressing an Islamic finance forum held in Muscat recently, the official noted that the new initiatives would provide further impetus to an industry that has grown by leaps and bounds over the past decade.

“Within a span of 10 years, Islamic finance has emerged as one of the fastest growing segments within the financial services industry since the establishment of two Islamic banks and six Islamic banking windows in 2013. Since then, the capital market sector, the MSX Sharia Index was launched with Sharia-compliant listed companies on the Muscat Stock Exchange (MSX). An Islamic Investment Fund has been established, while the Oman Sovereign Sukuk and Corporate Sukuk with various Sharia structures have been issued,” the official stated.

Notable achievements in this space, the official said, include the issuance of the first Oman Sovereign Sukuk, the first standalone corporate Sukuk, and the first Sukuk programme, as well as the first retail Sukuk, also the first dual currency Sukuk, both in Omani Riyal and the US dollar, and the first perpetual Sukuk in Oman.

“The various Sukuks that have been issued thus far will certainly contribute toward building a yield curve in Oman and hopefully motivate further Sukuk issuances in the local market,” Al Maamari said. “We have also seen the issuance of two Islamic REITs (real estate investments trusts) with a total fund size of about RO 110 million listed on the MSX.”

Furthermore, the CMA has fostered the development of a fintech-based crowdfunding industry in Oman, with a goal to enhance financial inclusion and the growth of the SME sector. It includes the establishment of the first global Islamic crowdfunding platform in the country.

To date, the CMA has licensed a total of nine crowdfunding platforms based on a distinctive crowdfunding framework that makes Oman the first in the Gulf region to allow global cross border fundraising and investment – a feature that most regulators currently disallow, he noted.

Also of significance is the regulator’s efforts to develop the virtual or digital asset industry in Oman, for which a new regulatory framework is currently being drafted.

“The CMA had recently issued Oman's Virtual Asset Regulatory Framework consultation paper for public feedback and is only one of the few countries in the Middle East undertaking this initiative. Digital assets are also considered Sharia permissible in some countries,” Al Maamari stated.