Muscat - The Capital Market Authority (CMA) has amended its directives on margin trading (or secured financing as it is called in the region) to upgrade the regulatory environment for more flexibility in trading operations.
This move is expected to enhance the investment environment and boost trading volumes in the Muscat Securities Market (MSM)
In a statement on the CMA website, H E Abdullah al Salmi, executive president of CMA, said the amendments aim to expand the base of licensed companies dealing in secured financing and to include listed companies of regular and parallel markets of the MSM. Earlier, brokerage companies were allowed to provide secured financing for trading in only MSM30 index companies.
The amount a licensed brokerage company can offer as secured financing to a single client has been increased to RO500,000 from RO250,000, provided that the sum is not more than 15 per cent of the funds a licensed company provides as secured financing.
H E Salmi said the new amendments were made in line with the CMA's policy in reviewing regulations to enhance their efficiency to protect market participants, taking into account the flexibility and options for investors.
The market regulator has also increased the duration of the maintenance of margin to five days from the earlier three days, enabling brokers to meet the margin maintenance ratio from clients.
Where the actual margin falls below the agreed maintenance margin the regulation obligates the broker to inform the client immediately after the trading session to top up the actual margin to the level of the agreed maintenance margin in not more than five days from the trading date on which the fall had occurred.
On the other hand, the amendments also allow the company licensed for secured financing to provide financial facilities for trading purposes, provided the client pays the facilities in not more than three months from the date of the transaction.
© Muscat Daily 2016
