Securities Law offer Multiple financing Options and Provides Legal Framework for Virtual Assets
Al Salmi:
The Executive President of the of the Capital Market Authority confirmed that the issuance of the Securities Law under Royal Decree No. 46/2022 comes within the framework of moving forward with the regulatory level of the securities industry in the Sultanate of Oman to levels that keep pace with the current and future requirements in light of the technological revolution, and the legal actions required to regulate the financial technology and create a legal infrastructure for innovative financing instruments. HE expressed his happiness that the law was enacted to primarily protect the consumers in the Omani capital market and to ensure furnishing a financing environment with multiple options and a high ability to attract local and foreign capital by enhancing the public’s confidence by providing fair investment environment based on integrity and transparency, and a market with requirements that provide adequate protection for the owners of capital.
HE Sheikh Abdullah Salem Al Salmi, Executive President of the Capital Market Authority, said that the issuance of a new securities law contributes to achieving the strategic priorities of Oman Vision 2040 , which is to support the initiatives that contribute to economic diversification and ensure financial sustainability, as well as supporting the private sector, investment and international cooperation, in addition to Providing a competitive and investment-attractive business environment in which the government exercises the regulatory role associated with successful administrative efficiency, in addition to transparency and firm institutional disclosure that guarantees the right of access to information, and the articles of the law came to translate the strategy set by the CMA to enhance the performance of the capital market sector to act as an engine of economic development.
On the key features of the law, HE said that the new Securities Law contributes to creating an independent law regulating the securities industry in the Sultanate of Oman in line with the requirements of the current and future development stage, as it is flexible enough to define the general principles and leaves the details for the decisions and the regulations to be issued by the CMA successively and within a year from the effective date of the law, which is the day following the date of publication, and the law confers on the CMA adequate powers to better regulate and develop the sector in order to achieve the desired objects and aspirations.
Al Salmi added that the law keeps pace with the developments brought about by the technological revolution, as it provides s a legal framework related to regulating the requirements of Fintech, which contributes to providing financial support to economic sectors using innovative financial solutions, as the law confers on the CMA the power to regulate innovative financing and approval of the application of technology and virtual investments. The law also allows expanding financing options by regulating new products and services such as warehouse receipts, derivatives, futures etc.
HE pointed out that the Securities Law supports special programs and initiatives to finance small and medium enterprises, given the economic importance of this type of enterprises, whose financing needs are of a special nature, which addresses one of the most important challenges facing entrepreneurs the owners of small and medium enterprises.
HE explained that the law created the necessary legislative infrastructure to ensure the independence of the Muscat Stock Exchange from the CMA as self-regulated institution, and allowed the stock exchange to regulate brokerage activities, market making and margin financing. The law also conferred on the CMA the authority to license the establishment of a stock exchange for small and medium enterprises. The articles of the law also focus on achieving the principle of fairness and protection for the participants in the capital market in the Sultanate of Oman by putting in place many global practices, including those issued by the International Organization of Securities Commissions (IOSCO). The law also provided the necessary legislative cover to address the shortcomings in the rating report prepared by Thomas Moore on Muscat Clearing and Depository Company, which will enhance the rating of the company to higher levels that will enhance its position among its peers.
HE said Article 9, which obliges the CMA, while exercising its powers, to encourage competition and innovation in services and products provided by the entities subject to the provisions of the law, to facilitate equal access to customers, and to work to determine the costs that the CMA imposes on the entities subject to the provisions of this law, commensurate with the advantages of the consumers, in addition to ensuring striking balance between the interests of the regulated entities and the interests of the consumers.
HE pointed out that the law addressed an important matter that will contribute to the development of the capital market, which is to encourage the establishment of independent institutions that engage in investment banking activities, concerned with providing advisory services related to financing options, acquisitions, control and other services.
In order to enhance the investor protection systems, the Securities Law is concerned with; HE confirmed that the law empowers the CMA to establish a consumer protection fund to compensate the consumers in the event of losses to their assets held with the firm. HE explained that the fund does not cover losses resulting from a change in the nominal value or entering into inappropriate investments or distress of the issuer of the security, and it does not cover losses related to the assets that consumers lent or provided as guarantee to an entity operating in the field of securities under an agreement between them.
In the context of strengthening the investor protection system, the law gave clients who lost their assets with any of the licensed entities under liquidation the priority over creditors. Article (52) provides that the CMA must appoint a liquidator if it is evident that any of the members of the Consumer Protection Fund has declared bankruptcy. Where the assets of clients are unspecified they must be distributed on pro rata basis and the clients who lost their assets with the licensed entity shall have priority over the creditors.