Kuwait set to revive bourse regulator bill

Kuwait's commerce and industry minister will brief a parliamentary committee on Thursday to revive plans to set up a financial supervisor, as doubts about regulation dog the Arab World's second-largest bourse.

The country hopes to attract more foreign investors with the bill and bring more transparency to the Kuwait exchange, which has been plagued with irregularities in prices and disclosure.

Parliament has yet to weigh the bill, which has been delayed for more than a year and is under review by a committee formed by the Commerce Minister Ahmad Baqer, MP Nasser Al Sane the head of the financial and economic committee said yesterday.

"The minister of commerce will brief us on the latest updates on the draft law to set up a regulator for the bourse," he said, offering no date when MPs might decide on the bill.

Analysts say a lack of transparency and insider trading is a major reason why the Kuwait stock market, where shares often move ahead of filings, has attracted fewer foreign investors than Gulf neighbours such as Dubai.

Currently, Kuwait is the only Gulf Arab state without an independent authority supervising the stock market where foreign investors complain that key company news are only made available in Arabic and unsourced newspaper reports often move stocks. "Transparency in our markets still needs a lot of amendments in laws and regulations to help investors trust the market. It is becoming a necessity now to establish a financial regulator for the bourse," said Amani Bouresli, a professor of finance at Kuwait University.

The government had originally asked a team headed by Bouresli to draw up a tough draft based on recommendations by foreign experts but then dropped her proposal in favour of a softer version, sparking criticism.

Since then, the committee and the government have been unable to agree on a final version that would still require approval by the floor and Kuwait's ruler.

Adding further woes, the stock market has been locked in a battle with more than a third of all listed firms opposing some new listing rules they say are too tough. The bourse says it only wants to achieve more transparency.

Like other bourses in the region, Kuwait's market says it is trying to crack down on abuses that for years helped deter foreign investment in its shares, although it has relatively little power to act.

In 2006, it banned the family-owned Kharafi Group from using the exchange to trade shares in 10 firms for violating disclosure rules. Courts overturned the bans last year. Meanwhile, the main index has dropped more than 20 per cent since June 25.