New market rules to boost liquidity

11/06/2014 07:21 AST

The Bahrain Bourse (BHB) announced that it will implement key market rules from September 1.

The new rules will provide margin trading that will sequentially enhance the liquidity in the market.

This was approved at a BHB board meeting chaired by Yusuf Abdulla Humood, where they discussed the new market rules which were recently approved by the Central Bank of Bahrain.

The board decided that brokers will be given a six-month transitional period from the date of implementation to meet the requirements of the new market rules.

The new rules provide improvements in several areas relating to the bourse's main operations.

It also allows non-Bahraini brokers who are licensed by capital market regulatory institutions in their countries to trade in the BHB without having a representative office in Bahrain, given that an authorised clearing member should be appointed to settle transactions executed at the bourse.

In addition, the new rules outline the general framework for market makers and the mechanisms that should be used to organise their buy and sell transactions.

A notable area is the reduction of the number of exceptional cases from 16 to only four cases, which will have a positive impact on BHB main market.

Moreover, the rules organise the procedures of issuing licences to brokers according to new requirements that will contribute to developing the services brokers provide to investors at the bourse.

The issuance of the rules are in line with the goals of the strategy adopted by BHB in 2011 which includes a plan to develop several legislative and technical areas of the bourse.

The rules allow the trading of new investment instruments such as options, ETFs, REITS, and includes other areas related to developing trading mechanisms at the bourse.

It includes developing BHB's independent systems including an arbitration committee that will adjudicate on all disputes relating to transactions carried out on the bourse and a disciplinary board to decide on any violation to the law, internal regulation and resolutions which regulate the bourse, and any violation affecting the conduct of business and discipline at the BHB.

Gulf Daily News