Qatar's capital market will see the advent of market makers by the second of half of this year as part of efforts to enhance liquidity and efficiency as well as ensure smooth entry/exit for investors.
In this regard, the Qatar Stock Exchange (QSE) and the Qatar Financial Market Authority (QFMA) are giving final touches to rules governing market makers, which have the ability to facilitate price discovery.
The market making activities are to be carried out by the financial services companies, members in the market, after obtaining the necessary licences from the QFMA, in accordance with the rules set by the regulator within the framework of its efforts to develop the activities and financial services relating to Qatar’s capital market.
"Carrying out the market making activity by the licensed financial services firms, expected in the second half of the year 2017, will help enhance the market liquidity of eligible securities," a QSE spokesman said.
“It is certainly a welcome move. They (market makers) play a key role in providing liquidity to facilitate market efficiency," an analyst with a leading investment house said, adding that in the absence of market makers, it usually takes longer for buyers and sellers to match, translating as lower liquidity and higher trading costs owing to difficulties in entry and exit.
According to the rules, the market maker (the brokerage company which is a member of the exchange) shall, pursuant to a licence obtained from the QFMA, provide quotes in one or more eligible securities to enhance its liquidity in a manner specified in the agreement signed between the bourse and the market maker, setting forth the terms and conditions the market maker is entitled to comply with.
As per the rules, the market maker has to sign an agreement with the issuer setting the rules and conditions to be followed in order to enhance the liquidity of the admitted security of the issuer and should comply with all the regulations of the exchange and the market making rules, the spokesman said, adding the rules have specified several criteria and conditions that should be met by the financial services entity for obtaining the market making licence from QFMA.
Among the conditions are capability, systems and controls required for market making, any additional capital adequacy requirements the exchange may impose for market making; the systems, procedures and controls in respect of managing the risks associated with and other requirements related to training, and competency of the personnel involved in market making.
According to the rules, the QFMA has the right to suspend or terminate any market maker pact to maintain the integrity of securities trading, and that the rules give the exchange the right as well to suspend or terminate any market making agreement in the event of non-compliance with any of the conditions or any breach of Law No (8) of 2012 regarding QFMA as amended, the regulations, rules and decisions issued in implementation thereof, or the exchange’s rules, and shall notify the authority of measures taken against such market maker.
The market making activities are to be carried out by the financial services companies, members in the market, after obtaining the necessary licences from the QFMA, in accordance with the rules set by the regulator within the framework of its efforts to develop the activities and financial services relating to Qatar’s capital market.
"Carrying out the market making activity by the licensed financial services firms, expected in the second half of the year 2017, will help enhance the market liquidity of eligible securities," a QSE spokesman said.
“It is certainly a welcome move. They (market makers) play a key role in providing liquidity to facilitate market efficiency," an analyst with a leading investment house said, adding that in the absence of market makers, it usually takes longer for buyers and sellers to match, translating as lower liquidity and higher trading costs owing to difficulties in entry and exit.
According to the rules, the market maker (the brokerage company which is a member of the exchange) shall, pursuant to a licence obtained from the QFMA, provide quotes in one or more eligible securities to enhance its liquidity in a manner specified in the agreement signed between the bourse and the market maker, setting forth the terms and conditions the market maker is entitled to comply with.
As per the rules, the market maker has to sign an agreement with the issuer setting the rules and conditions to be followed in order to enhance the liquidity of the admitted security of the issuer and should comply with all the regulations of the exchange and the market making rules, the spokesman said, adding the rules have specified several criteria and conditions that should be met by the financial services entity for obtaining the market making licence from QFMA.
Among the conditions are capability, systems and controls required for market making, any additional capital adequacy requirements the exchange may impose for market making; the systems, procedures and controls in respect of managing the risks associated with and other requirements related to training, and competency of the personnel involved in market making.
According to the rules, the QFMA has the right to suspend or terminate any market maker pact to maintain the integrity of securities trading, and that the rules give the exchange the right as well to suspend or terminate any market making agreement in the event of non-compliance with any of the conditions or any breach of Law No (8) of 2012 regarding QFMA as amended, the regulations, rules and decisions issued in implementation thereof, or the exchange’s rules, and shall notify the authority of measures taken against such market maker.
