Qatar’s capital market is all set to see the advent of liquidity providers, listing of the units of investment funds and securities lending/borrowing besides entry of foreign brokerage houses.
These have been made possible with the Qatar Financial Market Authority (QFMA) strengthening its legislative infrastructure by issuing four new regulations on financial services.
The new laws cover activities, including liquidity providers, lending and borrowing of securities, rules of guaranteed entry to market’s standards and rules for listing units of investment funds.
“These regulations came following analysis and study of the Qatari market’s current needs and requirements, and will help improve the market’s efficiency, performance and depth, increase the level of liquidity, as well as expand the investment base and prospects in the local climate and will achieve the desired goals,” said Nasser Ahmed al-Shaibi, CEO of QFMA.
About regulating liquidity provider activity, the authority was of the view that it would help enhance the liquidity of securities listed in the licensed markets.
“One or more liquidity provider may be licensed to set the prices of selling and buying a particular security in order to increase its liquidity in accordance with the rules and terms specified in the liquidity provider agreement,” a QFMA spokesman said. Liquidity providers act as market makers in the NYSE Euronext cash market model’s order-driven system. They bring greater price stability and distribute securities to both retail and institutional investors.
The QE had said a company listed on its junior bourse for small and medium enterprises should have a designated liquidity provider.
The new regulations also cover the activity of lending and borrowing of securities, which allow licensed financial service providers to lend and borrow the listed securities to settle the failure of transactions, as a first phase.
The securities lending and borrowing transactions have been growing steadily for years and now represent a substantial part of the daily settlement value in most European markets and play an important role in facilitating market liquidity.
On the entry of foreign brokerage houses, the QFMA said the “guaranteed entry to market activity allows licensed financial services companies to perform brokerage services for foreign companies, allowing them enter the trading system in the exchange market by using the brokerage firm’s direct connection line, in accordance with specific regulations and standards for the purpose of buying stocks under the umbrella of the brokerage firm’s transactions.”
The laws included a number of items of definition which clarify the nature of the related parties, the scope and nature of the work referred to in the new law, a statement of the conditions of the activities to which the new laws shall be applied, and the role of authority in managing the activities of concerned parties in the light of the mentioned regulations, according to the spokesman.from gulf times.