Title: Press Release: Approving of Regulations for Bi-lateral Securities Lending and Borrowing

Kuwait, August 26, 2024 – In line with the Capital Markets Authority’s (CMA) role in developing the capital markets and diversifying its investment instruments, while striving to align with the best international practices, the Board of Commissioners, in its meeting held on August 21, 2024, issued a resolution to amend the regulations of Kuwait Clearing Company to regulate Bi-lateral Securities Lending and Borrowing. This marks the launch of a new type of investment instrument, in addition to the central lending and borrowing service currently provided through the so-called “Lending Pool” and market maker’s lending and borrowing service.

This regulation comes in response to investor expectations and the feedback received by the CMA and Kuwait Clearing Company from several local and international parties. The lending and borrowing instrument aims to increase market efficiency and operations, as this instrument can be used, for example, to cover short selling transactions, which can be executed in accordance with the regulations governing it stipulated in Chapter 9 of the Exchange Rules. This instrument can also be used in risk management to address failures related to securities settlement. Moreover, the introduction of this instrument enables the launch of other products in the future, such as derivatives, hedge funds, and other investment products.

The Bi-lateral Securities Lending and Borrowing service facilitates reaching an agreement between two parties to participate in lending and borrowing securities, in coordination with Kuwait Clearing Company. This provides greater flexibility for completing the process of financing shares as agreed upon by the two parties: the lender and the borrower. The launch of this service, along with the central (pooled) lending and borrowing service, provides variety to utilize lending and borrowing of securities based on the needs of different investors’ categories.

On this occasion, the CMA draws attention to the relatively high risks associated with short selling (compared to investing in purchasing shares) and calls upon all investors to understand these risks and assess their suitability before engaging in these transactions.

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Notes to Editors:

The Capital Markets Authority (CMA) of Kuwait was established pursuant to Law No. 7 of 2010 Regarding the Establishment of the Capital Markets Authority and Regulating Securities Activities, and its amendments, approved by the Kuwaiti Parliament in February 2010. Under this Law, the CMA regulates and supervises securities activities, ensures transparency, fairness, efficiency, and observes listed companies’ implementation of Corporate Governance regulations. The CMA also protects investors from unfair practices and violations of the CMA's Law.

Furthermore, the Law's provisions stipulate the supervision of mergers, acquisitions, and disclosure operations. The CMA also aims to provide awareness programs related to securities activities.

For further information, please contact:

Public Relations & Media Office

Tel: 22903062

Fax: 22903505

Email: pr-media@cma.gov.kw