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Capital Markets Authority: Kuwait Investment Forum - March 2018

IM Insights
By IM Insights
2 years ago
Capital Markets Authority: Kuwait Investment Forum - March 2018

Sukuk

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  1. Capital Markets Authority Kuwait Investment Forum 2018 March 2018
  2. Scope of CMA regulation Products Scope of CMA securities regulation includes issuances of new capital , listings, dealing, and trading. • • Common Stock Preferred Stock Collective Investment Schemes Non-Exhaustive Bonds Sukuk Derivatives Securities are flexible tools that can be utilized (as a currency) by issuers in a variety of ways; This can lead to the peripheral/derivatives of securities such as stock lending and borrowing, repos, futures, forward, options...etc. CMA Data Classification: Internal 1
  3. Capital is key element for issuers Three pillars to help issuers enhance the value of their capital i ii Transparency • Supervisory tools to increase transparency from issuers. Focus • Corporate governance codes. iii Infrastructure • Clearing & settlement reforms. • Market structure development. • Enhance liquidity. Products • Expanding the range of products. • Examples include: SLB, Margin Lending, and Derivatives. • Segmentation of issuers (new listing standards). CMA Data Classification: Internal 2
  4. Securities issuances Issuances of securities in the State of Kuwait (USD) 10,000,000,000 9,000,000,000 8,000,000,000 7,000,000,000 6,000,000,000 5,000,000,000 4,000,000,000 3,000,000,000 2,000,000,000 1,000,000,000 2015 2016 Shares CMA Data Classification: Internal 2017 Bonds 2018 (YTD) Sukuk 3
  5. Development program Provide environment and infrastructure that are conducive to market development . First and second phase  focus on main products (stocks / bonds) Launch of 1st phase in May 2017 was emphasized on clearing and settlement and trading mechanisms. As a validation of the development process, Kuwait was upgraded in September 2017 to Emerging Status by FTSE Russell. The 2nd phase (to be launched in 1st of April 2018) aims at stimulating broad market liquidity and enhancing risk management tools. The 3rd and 4th phases revolve around full infrastructure reform to expand products (derivatives, SLB, etc) CMA Data Classification: Internal 4
  6. Role of CMA in diversifying financial products Live Market Development 1 Target Launch : 1st of April 2018 Market Development 2 MWTs to Start in 2nd half 2018 MWTs to Start in 1st Half 2019 Market Development 3 • Unified T+3 settlement cycle for all participants • Buy-in board, with roll-over and cash close-out • Funds settlement via central bank • Custodian rejection facility • Late confirmation for Custodian rejections • Qualified brokers as preparation for clearing membership model • Broker/ custodian collateral • SLB / short-selling for maker makers • Reduced tick sizes • International-style corporate actions timetable • New auction mechanism • Market segmentation with new indices • Circuit breaker • OTC platform (separate launch) • Special trades enhancement (automation) • CCP – Cash • Collateral management STP • Extended SLB/ shortselling Market Development 4 • CCP – Derivatives • Introduction of new products, Sukuks and Bond, ETFs and derivatives • Clearing membership structure to replace QBs and NQBs • Enhanced risk waterfall model (clearing members model) • Sub-accounts identification for omnibus accounts • Repos • Margin lending • Risk waterfall model (brokers model) New products will be launched throughout the implementation of market development program, along with risk management tools. CMA Data Classification: Internal 5
  7. FTSE Russell upgrade (closer look) Inflows from benchmarked funds Alignment with international practices Increased institutional and foreign investors Market upgrade impact and benefits Enhanced IR role Diversified sources of capital CMA Data Classification: Internal 6
  8. Thank you CMA Data Classification : Internal CMA Data Classification: Internal 7