New steps to boost trading on MSM

13/11/2016 05:27 AST

Introduction of new measures including changes in regulations is expected to improve trading activities on the Muscat Securities Market (MSM). Beginning today, the local bourse will have day trading facility which will enable investors to buy and sell same shares in the same trading day, or sell existing shares and buy them back in the same day, through the same broker. The local bourse has been under the grip of low liquidity with the average daily traded volumes falling around RO 2.5 million in October.

The market’s weak performance this year has been widely attributed to the decline in the price of oil, leading to concerns about an economic slowdown in the Sultanate. On the last day of trading, which ended on a positive note on Thursday, a total of 11.311 million shares were traded amounting to an aggregate turnover of RO 1.882 million.

The MSM30 Index market capitalisation as at the end of the day stood at RO 6.228 billion, whereas overall market capitalisation, excluding bonds, exceeded RO 8.408 billion.

On May 24 this year, the Capital Market Authority (CMA) announced that it has replaced regulations governing margin financing by brokerage companies with a new set of rules. Among other things, the new rules extend secured financing facilities, previously restricted to MSM30 Index companies, to companies listed in the regular and parallel markets.

Day trading is usually used by traders seeking to make profits by taking advantage of small price movements in liquid stocks, for that MSM and Oman Brokers Association selected 30 most liquid companies listed on the MSM and traded at least 50 per cent of trading days in 52 weeks to form the eligible list of companies for day trading.

A cap of 200,000 shares has been set for each company, meaning that a trader can do day trading and get commission discount up to this cap in each company.

According to Saqr bin Mohammed al Khalili, Deputy General Manager of Operations and Surveillance, investors now need not sign any contracts or documents with their brokers to be fit for day trading, all investors, except trust accounts, can get the commission discount each time they execute Day Trades.

Yet analysts are of the opinion that the bourse is keenly watching on the much awaited make or break outcome of the Opec meeting at the end of the month.

“This is likely to dictate not only the local bourse but also the regional market’s direction going forward”, said an analyst at a local brokerage house.

“We believe the MSM Index to trade sideways due to lack of fresh triggers amid lackluster volumes during the month”, he said.

Oman Daily Observer