Kuwait CMA launches third phase of market development project

KUWAIT: The Capital Markets Authority held a press conference yesterday to launch the first part of the third phase of the market development project. Muthanna Al-Saleh, Head of the Markets Sector at CMA, presented the changes that were launched in the first part of the third phase and their objectives. He explained the activation of short selling, lending and borrowing shares will be applied later after further testing.

He said these changes, which are being implemented as part of the market development project, have received global acclaim. “The phase will include the complete use of stock lending and borrowing (SLB) and applying short sale conditional on the application of borrowing shares, along with improving off-market trade, introducing an after-hours trading session and improving the investment fund trading platform,” Saleh added.

Boursa Kuwait has launched new investment instruments, including the real estate fund trading platform (REITs). The financial instruments include a swap service, and a buy offer service that allows anyone to buy at least 5 percent and no more than 30 percent of the shares of any listed company.

The stock exchange will adjust its trading mechanism to 10 percent, up or down, instead of 5 percent. The stock will stop trading for two minutes at a high or a 10 percent drop. The bourse will also launch a trading session after closing for 5 minutes, and stock prices cannot exceed or fall below the closing price.

Phase III is an additional step in the market development project, which completed Phase I in May 2017 and Phase II in April 2018. The most important results of the previous phases were the upgrading of Kuwait to the rank of emerging markets by the world’s top rating institutions such as FTSE Russell and S&P Dow Jones, as well as placing Kuwait on the watch list for promotion by MSCI.

It should also be noted that the changes of this phase were implemented after conducting a series of extensive tests with all participating parties in order to ensure the ability of their automated systems to accommodate all the variables related to this stage. The list of participating parties includes the Capital Markets Authority, Boursa Kuwait, Kuwait Clearing Company and other investment companies.