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A recent move to relax secured financing or margin trading is expected to boost liquidity and trading volumes on the Muscat Securities Market (MSM). It also brings welcome clarity to the rules governing margin trading by licensed brokerage companies. On May 24, the market regulator, the Capital Market Authority (CMA) announced that it has replaced regulations governing margin financing by brokerage companies with a new set of regulations (CMA Decision 4/2016). Among other things, the new rules extend secured financing facilities, previously restricted to MSM-30 Index companies, to companies listed in the regular and parallel markets.

In addition, the amount a client can obtain from a broker to purchase securities has been doubled from OMR250,000 to OMR500,000, while the broker’s overall exposure to a single client is limited to 15% of the broker’s total funds deployed in margin financing. However, each broker is permitted to set parameters for securities it is willing to finance on margin. The new CMA rules also increase the maintenance margin to 5 trading days instead of the earlier 3 days.

According to a statement by Abdullah Salim Al Salmi, Executive President of CMA, the amendment is one of a series of measures aimed at creating an attractive environment for local and foreign investors and instilling confidence in Oman’s capital markets as a key driver of economic growth through long-term financing of major strategic projects.

For more information on secured financing or Oman’s capital markets in general, contact Mansoor Malik or Ardeshir Patel.