The Capital Market Authority has approved the customers’ funds segregation form which helps monitoring of their being deposited and kept in separate accounts at the end of the first trading day. This will come into effect from February.
CMA Executive President HE Sheikh Abdullah Salim Al Salmi approved the form that has come as a move to monitor segregation of customers’ funds at the end of the first trading day of the week and to be filed with CMA the next day.
This, according to a statement, is to enhance the regulatory processes pursuant to Article 157 of the Executive Regulation of the Capital Market Law which provides that funds belonging to customers shall be deposited and kept in separate bank account of the company. This is to settle the obligations resulting from sale and purchase of securities.
Customer’s funds shall not be used to cover deficits in the funds of other customers.
CMA market institutions director general Khalfan Mohammed Al Sharji said the form was prepared in line with best regulatory arrangements to apply the rules for segregation of customers’ funds from those of the companies operating in the field of securities. It is also to provide robust measures for protection of these funds recorded in the books of the companies and to ensure they are not used for other purposes to boost investor confidence in the companies and the market in general.
CMA has been closely monitoring segregation of customers’ funds regularly according to the audit plan of the licensed companies and had decided to have weekly monitoring.
Companies would be required to make a weekly disclosure of their net obligations toward the customers by calculating the sum credit balances in the customers’ accounts in addition to the total cheques issued and not cashed, any advance payment received by the customers but not credited in their accounts with the company up to the end of the calculation day of the segregation report minus the cheques cashed and transfers to customers’ bank accounts during the last three trading days. It would also have to disclose the total amount of cheques received from the customers but not credited in company account designated for the funds up to the end of the segregation calculation report day.
Al Sharji emphasised that weekly audit and the companies’ compliance with filling the segregation form would enhance the level of investor confidence in Muscat Securities Market and the licensed companies operating in the field of securities.