CMA approves Customer Funds Segregation Form

11 January 2017

News

CMA approves Customer Funds Segregation Form

 

The Executive President of the Capital Market Authority Sheikh Abdullah Salim Al Salmi has approved the customers’ funds segregation form. The move comes 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 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 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.

 

On the importance of the move Khalfan Mohammed Al Sharji, Director General of Capital Market Institutions, CMA  said the form was prepared  in line with best regulatory arrangements to apply the rules for segregation of customers’ funds from the funds of the companies operating in the field of securities and to provide robust measures for protection of investors’ 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.

 

Al Sharji pointed out that CMA has been closely monitoring segregation of customers’ funds regularly according to the audit plan of the licensed companies in accordance with the  provisions of Article 157 of the Executive Regulation of the Capital Market Law, hence CMA decided to effect the weekly monitoring.

 

He added the 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 to customers and not encashed,  any advance payment received by the customers but not credited in the customers’ accounts with the company up to the end of the calculation day of the segregation report minus the cheques  encashed by the customers and transfers to customers’ bank accounts during the last three trading days, the total amount of cheques received from the customers but not credited in company’s account designated for customers funds up to the end of the segregation calculation report day.

 

Al Sharji emphasized that weekly audit and the companies’ compliance with filling the segregation form would enhance the level of investor confidence in MSM and the licensed companies operating in the field of securities. He added the actual implementation of the form and its requirements will commence in the beginning of February.


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