CMA plans to introduce new securities law to safeguard investors

Business Saturday 10/December/2016 18:28 PM
By: Times News Service
CMA plans to introduce new securities law to safeguard investors

Muscat: Oman’s stock market watchdog Capital Market Authority (CMA) has released a draft securities law, which is aimed at protecting the larger interest of investors, with a special treatment to retail investors.
The draft law is now circulated among various stakeholders, including listed firms, brokerage firms, asset management companies, law and audit firms, to get their feedback before February 7, 2017.
According to sources, the final draft securities law, which will be finalised after incorporating all relevant suggestions from the stakeholders, will entrust the CMA with all powers to safeguard the interest of investors and facilitate introduction of innovative collective investment schemes, which can cater to all investment needs of Omani investors. Presently, the Omani market has only few collective investment schemes, which include mutual fund.
The existing law is not up to international standards for introducing new collective investment schemes.
The existing Capital Market Law, enacted in 1998 under challenging circumstances, is proposed to be replaced in parts with the new provisions. The new securities law is expected sometime next year, after incorporating suggestions and completing all necessary procedures.
“The objective of this draft law is to provide a legal and regulatory framework for issuing, transacting in or dealing with, all securities, securities related products and services within the Sultanate,” said a circular issued by the CMA. The aim is to create a concise and modern framework that can be later expanded through issue of regulations to cover the detailed aspects and be in total conformity with the applicable International Organisation of Securities Commission (IOSCO) principles.
The draft securities lawalso aims at providing autonomy and flexibility to the market entities like Muscat Securities Market and Muscat Clearing and Depository, clear powers and procedures for investigations and inspections, establishing a fair regulatory regime for enforcement of the law.
An important objective of the new draft is to create a radically refreshed structure for the securities industry in Oman and detailed regulations that would be issued later, under the provisions of the law. This will allow the primary legislation to remain unaffected by changes and growth of the industry and constantly meet the needs of time.
A growing economy like the Sultanate needs a vibrant securities market to provide the capital it needs and to manage the level of the various risks that it faces from time to time. When an Omani firm or investor uses a foreign intermediary for raising capital or investing surpluses, it imports such financial services, mostly due to lack of suitable alternatives in the local market.
There are significant restrictions in the current law that hinders dynamic and innovative growth of the industry which, is proposed to be replaced by a robust model that is line with the international best practices recommended by the International Organisation of security market regulators (IOSCO).
Another important dimension to the financial services sector as a whole and securities market in particular, is its ability to generate additional employment opportunities, compared to the manufacturing sector.
With the size and population of Oman, it can be safely argued that the securities has barely scratched the tip of the iceberg in terms its potential for creating jobs and revenues. The new law can catalyse the political stability of the country, its friendly relations in the region and its neighbours and its tax friendliness into a package that even foreign investors would find difficult to resist.