Kuwait establish stock market regulator

Kuwait Stock Exchange Regulator

The Kuwaiti stock exchange will be getting a market regulator to ensure complete transparency to prevent insider trading and fraud.

Middle-East-Online reports that Kuwait's parliament gave initial approval on Wednesday to a bill that would mandate the formation of an independent regulator for the emirate's stock market.

The 165-article Capital Market Law was passed unanimously in the first reading by the 48 members present, but the second and final vote will not take place for another two weeks.

The bill calls for an independent five-member Capital Market Authority whose main duties would be to ensure complete transparency and to prevent insider trading and other forms of illegal trading and fraud.

Lack of protection for investors

In the 1970s, Kuwait became the Middle East region's first bourse and has since then been run by a government-appointed administration that MPs said lacks the powers to ensure transparency.

But recently some cabinet ministers have expressed concern over a lack of protection for small investors. "Small investors on the bourse have been massacred as they lost their money. This law will put an end to suspect trades and will promote transparency," independent MP Ali al-Deqbasi said during the debate.

Conservative MP Khaled al-Adwah said the "stock market has been suffering chaos. There have been attempts to illegally make huge fortunes in the absence of stiff regulations."

The move comes as Kuwaiti authorities look to make its stock markets as advanced as those in more economically developed countries and also signals the ambitions of the region as a whole as it looks to become a more prominent player in the global market place.

At present the Kuwaiti stock market has a capitalisation of around 102 billion dollars and lists more than 200 local and foreign companies.

Kuwait's recovery from the global financial crisis has so far been fluctuating quite fiercely, and in 2009 it was one of only two exchanges in the Gulf (the other being the very small Bahrain stock exchange) to post record losses.

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