Capital market-REGULATORY BODIES

IN OMAN
 CMA- Stages of Development

First Stage Second Stage

1989-1998.
Establishment of Muscat
Securities Market (MSM).
One Unit (Regulation, Trading,
Settlement, Depository).
Organized Trading.
Laws and Legislation.

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 First Phase: Prior to MSM (1970- 1989)
o The year 1971 is the starting point of the
Omani capital market when Oman Hotels
floated shares for subscription as the first joint
stock company.
o Then a number of joint stock companies
emerged to reach 71 companies at the end of
this phase including 23 closed joint stock
companies and 48 public joint stock
companies with shareholders’ equity of RO
269.9 million distributed among 17,000
shareholders.
 Problems of first phase
o This phase was known for lack of organization and
transparency,
o Limitation of investment and trading to senior investors
and traders
o Absence of knowledge awareness of investment
o Control of unlicensed brokers over the market
o Absence of regulatory party
o Absence of required information for investors.

o These factors contributed to serious consideration of

establishing a regular efficient and professional market
to develop the securities in the Sultanate.
Phase-IIMuscat Securities Market(1989- 1998)
• MSM and commencement of work therein
in 1989 as:
• “ entity responsible for regulation of the
capital market and investor protection and
finding sound and efficient ways in directing
savings toward productive investment for
the benefit of investors and the national
economy in general as the organized capital
market”
is essential to the economic development
and growth.
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 MSM-GROWTH
• Move from manual trading to electronic
trading as an electronic trading system
was introduced in 1997 as the first Arab
state to apply electronic dealings which
led to rapid, disciplined and accurate
dealings.

• As the market was new and trading

volume was low MSM assumed the
regulatory, trading, settlement and
depository roles.
• The volume of trading and type of
transactions in the capital market in the
Sultanate as general caused the applicable
laws and regulations inadequate for such
development .
• MSM administration assumed the trading
operations, settlement, deposit and transfer
of records, pledge and attachment of
securities which dominated over the
regulatory role and weakened confidence in
the markets in the first quarter of 1998.
CMA-Stages of Development

First Stage Second Stage Third Stage

Restructuring 1998-To Now

Capital Market Muscat Securities Muscat Depository

and Securities Registration Company
Authority (CMA) Market (MSM)
(MDSRC)

Regulator Stock Exchange

Depository
 Entities Regulated by CMA:
Capital Market Authority
( CMA)

Credit Rating Muscat Securities

Agencies Market (MSM)

Muscat Depository and

Insurance Companies Securities Registration
Company (MDSRC)

Public joint stock Companies Operating

companies and in Securities
Investment funds
 ROLE OF CMA – INVESTORS’ PROTECTION

► Ensuring the issuers adopting disclosures

requirement to enable the investors take
the informed investment decision (through
disclosures).

► Fair market: ensuring the stock exchange

maintains professional standards by using
reliable systems in operations for display of
prices and trades matching (supervision
over the market).
► Ensuring that clearance and settlement
systems are orderly and reliable (surveillance
of clearance and settlement).
► Ensuring shareholders' registers are
maintained in an orderly way (Regulation
over MDSRC).
► Ensuring investors receive fair treatment
(Regulation of brokers).
► Enforcement: Implementation of efficient
and effective enforcement system.
 CMA- SHAREHOLDERS’PROTECTION
• Ensuring the adoption of International
Accounting Standards (IAS)
• Ensuring the implementation of the Code
of Corporate Governance.
• Adoption of International Auditing
Standards of regulated companies.
• Ensuring Proper and timely disclosures.
• Ensuring election, role and responsibilities
of the Directors.
CMA’s Strategy for Effective Implementation of
Regulations

• Review financial statements and internal

controls
• Inspection
• Trading Surveillance
• Developing disclosure norms
• Investigation
• Enforcement
 Capital Market Restructuring: Mile Stones
• Transfer of jurisdiction over public joint stock
companies from the Ministry of Commerce and
Industry to CMA (September 2001).
• Issuance of the Code of Corporate Governance (June
2002).
• Transfer of Insurance Jurisdiction from the Ministry
of Commerce and Industry to CMA (August 2004).
• Issuance of the Code of Corporate Governance for
Insurance Companies (August 2005).
• Development of the organizational structure of the
Authority (new departments: Enforcement and
Corporate Governance).
• Continuation of development and issuance of Laws
and Regulations.
• Muscat Securities Market is the first stock exchange
in the region that implemented Electronic Trading
System (1997).
• Oman is the first country in the region that
separated the Regulatory Body (Regulator) from
Muscat Securities Market (Exchange) in 1998.
• CMA is the first Regulator in the region to issue the
Code of Corporate Governance, in June 2002, and
Code of Corporate Governance for Insurance
Companies, in August 2005.
 CMA- INTERNATIONAL RELATIONS
CMA concluded a number of Memoranda of
Understanding with:
– Securities Commission of Malaysia.
– Capital Market Authority of Egypt.
– Securities and Commodities Authority of the
United Arab Emirates.
Memberships
– International Organization of Securities
Commissions (IOSCO).
– International Association of Insurance Supervisors.
– Arab Association of Stock Exchanges.
– Arab Association of Capital Market Authorities.
– The Committee of the Supervisors of Capital Market
Authorities and Financial Markets of the Gulf
Cooperation Council.
• Oman is on top among GCC countries in CG.
• Oman is the first country in the GCC to adopt the code
of CG.
• A functional corporate governance infrastructure gives
Oman an advantage over other GCC countries, whose
corporate governance frameworks have yet to meet the
threshold sought by international investors.
• Oman’s Code of CG focuses heavily on conflict of
interests.