Segmentation to create a premier, a main and an auction market

KUWAIT: Boursa Kuwait officials during a briefing on market segmentation

KUWAIT: Boursa Kuwait announced yesterday that the second phase of market development, which encompasses transformational changes such as a three-tiered, segmented market, the introduction of new market-capitalized indices and circuit breakers on securities and indices to curb volatility, as well as entirely new listing requirements has begun yesterday (April 1).

This phase will mark a milestone within Boursa Kuwait’s mission to develop a liquid, reliable and sound capital market providing issuers with efficient access to capital, and investors with diverse return opportunities, which is set to see Boursa Kuwait fortify its position as a leading regional exchange.

The new market segmentation is particularly a major step, creating a Premier, a Main and an Auction market, each with unique characteristics and obligations. Boursa Kuwait will also introduce new market-capitalized indices, which represent the segmented markets. All sectorial indices will be reset to reflect the start of the new markets.

As part of the second phase, the Boursa Kuwait Rulebook, which can be found on the website, will also be modified. All members must comply with the updated rules, which include new listing requirements reflective of the market segmentation effective 1 April 2018. Moreover, a circuit-breaker system on securities and indices will be launched as a measure to prevent potential market disruptions.

During the recent Annual Capital Markets Authority Conference, Boursa Kuwait CEO Khaled Abdulrazaq Al-Khaled highlighted that the second phase of market development is targeted at resolving some issues the market is currently still facing: “We believe that the platform and infrastructure we have developed in the past two years provides a solid foundation for the next chapter of Boursa Kuwait’s success story. As we make headway in the implementation of our market development plan, we will transform our capital market structure to become more attractive for local and international investors, which will allow us to work towards a higher classification by index providers.”

“Boursa Kuwait has an unequivocal commitment to pursuing best practices and increasing transparency for the benefit of their stakeholders. Its strategy focuses on developing the overall market status and addressing the needs of market participants through the provision of investment tools, restructuring the market to increase its competitiveness and liquidity, and attracting investments from local and international investors,” added Al-Khaled.

He said Boursa Kuwait signed a contract with the Ministry of Finance for a new building at the cost of KD 140,000 annually.
Transitional phase began on April 25, 2016, when Boursa Kuwait Company officially took charge of the operations at the bourse. “The first phase kicked off on May 21, 2017 during which we focused on reconstructing the infrastructure and developing a new market upgrading it to emerging markets status in September 2017. This signified that we are using international criteria for organizing the stock exchange. Today we launched the second phase that came after considered efforts by those who were working on the project. Today, we noticed a great understanding from all dealers at the bourse including the brokers, investment companies and other traders,” said Mishaal Al-Osaimi – Vice Chairman of Capital Markets Authority (CMA), Board of Commissioners.

“The second phase is a great leap. During the first phase, we had about five month-long testing period, while the testing period for the second phase was only about three months. This reflects the kind of cooperation extended by the members of the market system and their keenness in revamping the project. We are now looking forward to the third and fourth phases of the project bringing about significant changes that are both legal and technical,” he further said.

Khaldoun Al-Tabtabaie, Deputy CEO, Kuwait Clearing Company (KCC) noted that this revamping is very ambitious intended to take the market to international standards. “Any changes in the system are considered a challenge and the next phase calls for more challenges,” he said.

The revamping plan has not only changed the systems at the bourse but it has altered the culture of the market,” he said. Three companies would be listed on the bourse by the end of this year after modifying the listing rules,” he explained.

By Nawara Fattahova