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Kuwait City, November 3, 2018, within the Authority's efforts to implement the Provisions of Law No. 7 of 2010 and its Executive Bylaws, its various resolutions and guidelines, the establishment of rules of supervision and regulations in securities activity, and regulating trading in securities and facilitating the entry of foreign investors of international custodian clients to the Kuwaiti market, the Authority issued Resolution No. (135) of 2018 Regarding Amending Some Provisions of Module One (Glossary) and Module Sixteen (Anti-Money Laundering and Combating Financing of Terrorism) of the Executive Bylaws of Law No. (7) of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and their Amendments. This amendment is the result of a collaboration between the Capital Markets Authority and Kuwait Clearing Company, being primarily concerned with the opening of accounts to traders in the market.
This amendment is an important step in the development of the Capital Markets structure through initiatives and changes implemented by the Authority within the project of market development, in cooperation with Kuwait Clearing Company and Boursa Kuwait. The Authority received many observations from various foreign parties and custodians to develop this aspect, Consequently the Authority worked jointly with Kuwait Clearing Company to discuss and to improve the mechanism of opening trading accounts, taking into account the basic requirements of the law and its Executive Bylaws. Meanwhile, MSCI has noticed an improvement in this aspect by implementing the first phase of the market development project in May 2017, according to the consultation document for the reclassification of Kuwait to an emerging market, which coincided with MSCI's recent review last June. This subject is included in its consultation within the same document within the Key Questions section of the investors who are supposed to consult them to issue the upgrade decision. The main points of this resolution can be summarized as follows:
• Add a definition of the term Global Custodian, which is licensed by regulators in foreign countries that apply FATF recommendations.
• Organizing the process of verifying the identity of the client dealing with a foreign entity or an international custodian through the existence of specific requirements that must be provided by the parties dealing with a licensed person in Kuwait, in order to exempt the licensed person from certain requirements related to the verification of the customer's identity.
• Regulate the process of authorization by a third party to perform due diligence procedures towards the client.
Besides, the Board of Commissioners of the Capital Markets Authority, at its meeting No. 34 of 2018 held on October 31, 2018, approved some amendments to Chapter 3, "Regulating Dealing in Securities by Insiders " of Module Ten "Disclosure and Transparency" of the Executive Bylaws of Law No. 7 of 2010, the most important of which is the exemption of market maker from the scope of application of Chapter Three of Module Ten in relation to the securities in which it operates in this capacity, and amending the time limit available to listed companies to submit the list of insiders and updates to become within "five working days" instead of "immediately", also amending the insiders obligation to disclose all its owned shares by the listed companies and his minor children to include the disclosure of his owned shares and his minor children in the company where he is an insider at only.
It is worth mentioning that these two resolutions come within a series of improvements carried out by the Authority regarding regulating securities activity since its establishment. These improvements have contributed to the development of the investment and financial environment in the State of Kuwait. Kuwait's classification has been upgraded to an emerging market by FTSE. In addition, Kuwait's ranking in the protection of minority investor index has improved from 81 to 72nd, according to the Doing Business report of 2019 issued by the World Bank Group. The Authority will continue to make the necessary efforts to fulfill itsrole, in addition to completing the process of development and achievement.
Title: Amendments to facilitate opening trading accounts for foreign investors and the development of the disclosure requirements of insiders among the series of continuous developments and improvements carried out by the Authority in regulating securities activity
Date Publish
03 November 2018
Kuwait City, November 3, 2018, within the Authority's efforts to implement the Provisions of Law No. 7 of 2010 and its Executive Bylaws, its various resolutions and guidelines, the establishment of rules of supervision and regulations in securities activity, and regulating trading in securities and facilitating the entry of foreign investors of international custodian clients to the Kuwaiti market, the Authority issued Resolution No. (135) of 2018 Regarding Amending Some Provisions of Module One (Glossary) and Module Sixteen (Anti-Money Laundering and Combating Financing of Terrorism) of the Executive Bylaws of Law No. (7) of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and their Amendments. This amendment is the result of a collaboration between the Capital Markets Authority and Kuwait Clearing Company, being primarily concerned with the opening of accounts to traders in the market.
This amendment is an important step in the development of the Capital Markets structure through initiatives and changes implemented by the Authority within the project of market development, in cooperation with Kuwait Clearing Company and Boursa Kuwait. The Authority received many observations from various foreign parties and custodians to develop this aspect, Consequently the Authority worked jointly with Kuwait Clearing Company to discuss and to improve the mechanism of opening trading accounts, taking into account the basic requirements of the law and its Executive Bylaws. Meanwhile, MSCI has noticed an improvement in this aspect by implementing the first phase of the market development project in May 2017, according to the consultation document for the reclassification of Kuwait to an emerging market, which coincided with MSCI's recent review last June. This subject is included in its consultation within the same document within the Key Questions section of the investors who are supposed to consult them to issue the upgrade decision. The main points of this resolution can be summarized as follows:
• Add a definition of the term Global Custodian, which is licensed by regulators in foreign countries that apply FATF recommendations.
• Organizing the process of verifying the identity of the client dealing with a foreign entity or an international custodian through the existence of specific requirements that must be provided by the parties dealing with a licensed person in Kuwait, in order to exempt the licensed person from certain requirements related to the verification of the customer's identity.
• Regulate the process of authorization by a third party to perform due diligence procedures towards the client.
Besides, the Board of Commissioners of the Capital Markets Authority, at its meeting No. 34 of 2018 held on October 31, 2018, approved some amendments to Chapter 3, "Regulating Dealing in Securities by Insiders " of Module Ten "Disclosure and Transparency" of the Executive Bylaws of Law No. 7 of 2010, the most important of which is the exemption of market maker from the scope of application of Chapter Three of Module Ten in relation to the securities in which it operates in this capacity, and amending the time limit available to listed companies to submit the list of insiders and updates to become within "five working days" instead of "immediately", also amending the insiders obligation to disclose all its owned shares by the listed companies and his minor children to include the disclosure of his owned shares and his minor children in the company where he is an insider at only.
It is worth mentioning that these two resolutions come within a series of improvements carried out by the Authority regarding regulating securities activity since its establishment. These improvements have contributed to the development of the investment and financial environment in the State of Kuwait. Kuwait's classification has been upgraded to an emerging market by FTSE. In addition, Kuwait's ranking in the protection of minority investor index has improved from 81 to 72nd, according to the Doing Business report of 2019 issued by the World Bank Group. The Authority will continue to make the necessary efforts to fulfill itsrole, in addition to completing the process of development and achievement.
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