Muscat Securities Market
|This article needs additional citations for verification. (April 2011) (Learn how and when to remove this template message)|
|Location||Muscat, Oman, Sultanate of Oman|
|Key people||Ahmed S. Al Marhoon Director General|
|Currency||OMR Omani Riyal|
|No. of listings||116 companies (2011)|
|Market cap||US$ 20,239.74 million(2010)|
|Volume||3,024.49 million Securities Traded (2010)|
The Muscat Securities Market (MSM, Arabic: سوق مسقط للأوراق المالية ) is the only stock exchange in Oman. It was established by the Royal Decree (53/88) issued on 21 June 1988, to regulate and control the Omani securities market and to participate, effectively, with other organizations for setting up the infrastructure of the Sultanate's financial sector.
After ten years of continuous growth, there was a need for a better functioning of the market. Thus MSM has been restructured by two Royal Decrees (80/98) and (82/98).
The Royal Decree (80/98) dated November 9, 1998, which promulgated the new Capital Market Law, provides for the establishment of two separate entities, an exchange, Muscat Securities Market (MSM), where all listed securities shall be traded, and the Capital Market Authority(CMA) - the regulatory. The exchange is a governmental entity, financially and administratively independent from the regulatory but subject to its supervision. Thus the securities industry in Oman was well established to enhance investors' confidence by developing and improving all the processes appertaining to the stock market.
As a continuing process in the development of the securities market, the MSM has developed its regulations to provide information and financial data relating to the performance of the Market and all listed companies directly to investors through a highly advanced electronic trading system. This will not only ensure transparency of dealings which is considered to be one of the main principles of fair trading, but will encourage investors to make the right investment decision at the right time.
The Market has developed its existing system of clearance and settlement, by introducing a new mechanism for ensuring stable dealings in securities, as well as providing a better environment attracting foreign investment into Oman. The former settlement mechanism was involving only three parties in the clearance and settlement: MSM, Muscat Clearing and Depository Company (S.A.O.C) and the brokers. The newly introduced settlement formula is through a settlement bank (Central Bank) with a Settlement Guarantee Fund (SGF).
SGF has been established with the contribution of all intermediary companies. It aims to guarantee continuation of settlement processes among intermediaries. Where any of the intermediaries is unable to provide the settlement amount, the SGF would transfer the deficit to the settlement bank on behalf of the intermediary and then collect the same from the intermediary. Thus the settlement would be smoothly completed.
The regular market has strict listing requirements. For listing on this market, companies must have a solid record of profitability.
The parallel market has relatively fewer requirements, and is therefore easier for companies to list on, especially the newly established ones. The third market consists of companies that are facing financial difficulties.
From its inception, Muscat Securities Market has issued instructions and regulations as required to ensure that it attains its objectives and performs its duties and responsibilities with the utmost efficiency and fairness, and in conformity with technical platform of the new electronic trading system, with intensive working on solid infrastructure enabling trading through the Internet.
Muscat Securities Market Index was established in 1992, and the base date was June 1990. The number of companies included in the index sample has changed overtime to reach currently 30 companies, the most liquid in the market.
The main objectives of the MSM 30 are to represent the price movement of the listed shares objectively and to be a benchmark for individual and institutional investors which guides them through their investment processes. To achieve these objectives, the MSM 30 has the following features:
1. Freely available shares for trading are included only. Any shares which fall under the following will be excluded: Founders (exclusion ends when the company issues two balance sheets for two consecutive financial years); Government holdings; Strategic holdings (10% or more); Locked-in shares, which are not tradable for at least 3 months.
2. A 10% capping (CAP) is set to ensure wider representation of smaller companies in the index.
3. The free float and capping has been revised (re-set) on a quarterly basis. The revision is conducted quarterly, by end of March, June, September and December. The index sample amendment, on the other hand, takes place in the beginning of July of each year. The sample is selected based on the applicable selection criteria (market capitalization, liquidity, and earnings per share). The MSM 30 index contains three-sub indices representing the three sectors (Banking & Investment, Industry & Services, and Insurance).
In the area of information technology, the Market finalized the procedures with regard to the replacement of the present trading system, which has been operating since 1998, with a more efficient system from Atos Euronext France, which is a very sophisticated system used in many developed markets. The new system ensures provision of the data and information immediately for the supervisory authorities, to enable them activating the regulatory role in trading. The new system broadcasts the trading data immediately to all users and enables the market to add many investment instruments in the future and to make an easy link with the other stock markets in the GCC and other countries. The new system is also expected to make the information dissemination more efficient.
Normal trading sessions are from 10:00 to 13:00 every day except Fridays, Saturdays and official holidays.