The Chief Executive Officer of Bahrain Bourse (BHB) Shaikh Khalifa bin Ebrahim Al Khalifa held a press conference on Tuesday, 9th September 2014 on the Market Rules that the Bourse started implementing as of the 1st of September 2014.
Bahrain Bourse prepared the Market Rules to go in line with its strategy to develop all aspects of work at the Bourse.
Shaikh Khalifa said that the Market Rules cover three main areas namely trading, clearing & settlement, and membership at BHB. Shaikh Khalifa clarified that the new rules set the trading mechanisms and procedures of the new investment instruments that the Bourse intends to license such as margin trading, derivatives, future options, and Real Estate Investment Trusts "REITs". In addition, the new rules clarify the procedures of online trading as well as the procedures of selling shares through auctions and the trading of newly listed shares in the IPO Market.
With regards to clearing and settlement, the rules set the procedures of electronic book entry that allows investors to verify ownership in shares without the need of presenting a paper certificate. The Market Rules also ensure the use of International Standards related to the procedures of delivery versus payment (DVP) regarding the clearing & settlement of transactions at BHB. The new rules also set requirements to enhance the relationship between brokers and their clients in a way that will secure the rights and obligations of all parties.
Shaikh Khalifa also clarified, "The new rules allow licensed brokers from capital market regulatory institutions in GCC countries to trade at BHB without having a representative office in the Kingdom of Bahrain, given that an authorized clearing member should be appointed to settle transactions executed at the Bourse." Shaikh Khalifa explained, "The new rules clarify the rules related to the brokers’ capital adequacy and the new categories of brokers that can be licensed by BHB to trade at BHB and the requirements for each category."
"By implementing the new rules, BHB aims at enhancing transparency at the Bourse and encouraging the issuance of new investment products for investors. The rules also intend to increase liquidity in the market and support the competitive capability of BHB to attract more local and foreign investments," he added.