Union of Arab Securities Authorities.

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The Board of Directors of the Qatar Financial Markets Authority “QFMA” approved an important rules and regulations. This comes as a part of the QFMA’s initiatives for the capital market and its ongoing efforts to regulate and activate the capital market, protect its stability and its participants, and persify its investment tools and mechanisms supporting Qatar Stock Exchange “QSE”.
THE MOST IMPORTANT OF SUCH RULES AND REGULATIONS APPROVED BY THE BOARD ARE:
   1. Rules regulating the market maker activity, which is a new addition to the financial services activities. Such rules aim at activating trading and increasing liquidity in the market, as well as maintaining its stability and balance when the financial services companies, specialized in this activity licensed and regulated by the QFMA, provide continuous offer prices for buying and selling the securities traded in the market.
   2. Operating procedures for ETFs “Exchange Traded Funds”, including short selling transactions covering such fund’s units or index components. This is an addition of a new financial product to the Qatari market alongside shares, governmental treasury bills and bonds, which contributes in the persity of securities available for investors.
   3. Procedures for protecting minority and small investors as a result of the transformation of public shareholding companies to another type of companies as set forth in the Companies Law No. 11 of 2015. Through which such procedures, the QFMA aims to provide adequate protection as per the international best practices for all shareholders when public shareholding company listed on the QSE transforming to any other type of companies.
   4. Rules for employees’ incentive shares in public shareholding companies listed on the QSE, which allow the listed companies organizing incentive schemes for their employees while preserving the shareholders' rights of the company by granting them the right to approve such schemes and supervise their implementation through periodic reports presented annually to shareholders.
In line with CMA’s endeavor to regulate securities activities according to Law No. 7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities and its Executive Bylaws and their amendments, and in CMA’s pursuit of transparency, and its belief in the value of participation and the importance of benefiting from the expertise and capabilities of regulated entities, with respect to their valid aspirations and visions in the issued decisions and regulations relevant to the field of securities activities, which would fulfill common interests, support the implementation of CMA’s decisions and regulations when properly enforced, contribute to CMA’s success in achieving its goals, and consequently achieve public interest goals.
Thus, the CMA announced conducting an opinion poll for regulated entities on the draft amendment 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, by adding Appendix 1 “Standards of Systems for Maintaining Records” to Module Eight (Conduct of Business). 
After the completion of the public consultation seminars on the first set of implementing regulations issued by the CMA in cooperation with World Bank experts in 2015, a specialized CMA working group has completed a rigorous translation process of the three implementing regulations into Arabic, thus allowing for the regulations to be published in the official gazette. The implementing regulations are already considered by CMA as set into force since the date of their publication.
A small brief on the published implementing regulations:

Licensing and Registration Regulation
In order to carry on a securities related business, an institution must be licensed by the CMA under Law 161/2011. Similar to banking business, licensing is critical to protecting customers and ensuring the safety and soundness of institutions operating in the capital markets. Licensed institutions are hence subject to ongoing supervision by the CMA.
Therefore, and as a direct result of this regulation, Banks, financial institutions and financial intermediaries with capital markets business will be “approved institutions” and subject to CMA regulations.

Business Conduct Regulation
“Business conduct” refers to how an approved institution governs and manages its business, its business operations, its systems and controls and its dealings with clients. Business conduct regulations are critical to investor protection, and to ensuring licensed institutions operate with integrity, sound management and effective controls.

Market Conduct Regulation
“Market conduct” refers to the standards of conduct applicable to trading by persons in securities markets. This regulation is critical to market integrity and ensuring fair and efficient markets. It applies to all persons involved in trading, except for item 4 below, which only applies to “Approved Institutions”.
FRA’s BOD decided that companies wishing to offer its shares, whether existing shares or capital increase shall be registered at FRA’s registry first before being listed at the Egyptian Exchange. Also, FRA’s BOD decision stated that companies shall meet the requirements set for calculating the fair value and approving prospectus or disclosure form for offering.

For its part, FRA will comply with standards of transparency and quality systems and companies’ requests shall be decided upon within fifteen days from the date of submitting the needed documents. In addition, Companies will be given a period of no more than one month to complete the offering and trading process in the Egyptian Stock Exchange. In this respect, investors will be aware of the timing of offering, listing and trading.

This decision will be followed by changes in many rules and executive procedures of listing rules prepared by the Authority, that is after consultations with the Egyptian Stock Exchange in preparation for its publication in the Egyptian Gazette and applying it from the next day of publication.
FRA’s Board approved number of important amendments to the Executive Regulations of the Capital Market Law. The amendments to the real estate investment trusts (REITs) included increasing the percentage in which the (REITs) may invest their funds in one project to be 50% if the size of the fund is 500 million pounds or less. In addition, if the fund size is more than 500 million pounds, then it will invest 30% of its funds as long as there is an acceptable feasibility study that is being disclosed to certificates holders. On the other hand, another restriction was amended regarding the fact that the total number of those who own 10% or more of the real estate investment trusts (REITs) shall not exceed75% of the total of fund’s certificate. If these funds are listed at the Stock Exchange, then it shall meet some listing requirements, namely, the minimum number of certificates’ holders and the ratio of tradable certificates. In addition, another restriction is amended and it is related to the fact that ratio of the contribution of the real estate investment trusts (REITs) in the capital of the unlisted real estate company shall not be less than two-thirds of its capital. The new amendments grant the Fund the right to set the percentage of contribution which is in the interest of certificates’ holders pursuant to the fund’s investment policies.
The amendments approved by the Board also allow Investment Manager to use intraday trading system provided that the transactions shall not exceed 15% of the daily volume of fund’s transactions.
Regarding charitable funds, the new amendments allow these funds to invest in various types of mutual funds and it not being limited to private equity funds or real estate investment trusts (REITs) in accordance with the regulations set by the Authority .

In order to facilitate the work of the open-ended funds, the proposed amendments allow banks and insurance companies to issue more than one issuance for open-ended funds.

 

FRA’s Board of Directors issued a regulatory decision after gaining the Board’s approval. The said decision requires obtaining the approval of the company’s General Assembly upon purchasing treasury shares where the percentage of ownership or voting rights of a shareholder or a related group exceeds the percentage set upon submitting a mandatory tender offer, besides the shareholder and the related persons will not participate in voting on purchasing decision in the General Assembly, that is due to the possibility of obtaining an exemption from the Authority upon submitting a mandatory tender offer.
The decision also regulates obtaining an exemption from the Authority regarding not submitting a mandatory tender offer in cases of capital increase whether in cash or through credit balances if the percentage of ownership or voting rights of a shareholder or related group exceeds the percentage set upon submitting a mandatory tender offer, on condition that this is not resulted from purchasing subscription rights in capital increase.

The Authority's decision no. 81 of 2013 was canceled in the light of what was stated in the new decision. Besides, rules of purchasing treasury shares stated in listing and delisting rules will be amended in line with the provisions of the said decision .

 

FRA agreed in principle on the Capital Market Advisory Committee’s recommendation to regulate the rules governing intraday trading mechanism, which increase the maximum limit of THE client to be 1/10000 instead of 20000/1 and allowing him to repeat dealing within the said percentage during intraday trading session. The said proposal shall be presented to the Board of Directors at the next meeting to proceed with the amendment procedures. Also, FRA approved the Committee’s recommendation regarding adding Index Fund certificates to List “ B” of marginable securities list and this shall be done concurrently with the updated lists which include shares that are allowed to be engaged in specialized activities.
FRA’s BOD approved the amendment to decision no. (17) of 2017 issued on 28/2/2017 regarding regulating trading rules and proof of ownership of unlisted securities. The new amendment extends the period in which brokerage companies can notify the Stock Exchange of the transactions required to transfer the ownership of the unlisted securities for one month from the date of the order instead of one week, taking into account the practical cases for such transactions that can exceed the set period stated in the said decision. In addition, extending the period of one week that is stated in the decision will grant greater flexibility that suits the nature of market’s transactions.
The said amendment also states that the purchaser may prove that he deposits the value of the transaction in the bank account for a period exceeding one month stipulated in the same decision in accordance with reasons estimated by the Authority.

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