Ready to regulate

A look at Kuwait's new Capital Markets Authority.

Kuwait's new Capital Markets Authority (CMA), which awaits approval from the government, is to be modelled on the Saudi Arabian regulator. According to the bill through which it was established, the Kuwait CMA will take over functions previously carried out by a combination of government departments and the Kuwait Stock Exchange management. Kuwait is the only country in the Gulf that does not have an independent market regulator.

The CMA is to be led by a five-member board nominated by the Kuwaiti prime minister. It is not clear how many people the CMA will employ, or how actively it will police crimes such as insider trading and investor fraud. If Saudi's regulator provides any guidance, however, analysts say it could be a large and effective organisation. Since Saudi's regulator was established in 2003, the number of companies listed on the exchange has jumped by nearly 90 per cent to 136, according to MR Raghu, the head of research at Markaz, a Kuwaiti investment company. The average daily value of trades has also jumped, he says, from just US$160,000 (Dh587,000) in 2004 to $1.3 million last year. Most of Saudi's public companies now report financial results on time.