Kuwait: Kuwait Financial Center “Markaz” announced its successful participation in the “Market Maker” seminar, organized and hosted by Boursa Kuwait on September 26, 2022 at Al Kharafi Hall, headquarters of Boursa Kuwait. Mr. Fahad S. Al-Rushaid, Vice President – MENA Equities, represented Markaz and was joined by Mr. Sulaiman Al Musallam, Deputy Senior Manager, Market Makers Department in Asset Management at Kuwait Investment Company. The event was moderated by Mr. Bader Al Nesef, Deputy Director – Institutional Investor Affairs, at Boursa Kuwait. Markaz’s participation in the seminar reinforces its position as one of Kuwait’s leading financial institutions that plays a major role in raising awareness among market players and encouraging the adoption of international best practices and the development of new operational tools, while bringing innovation and leadership in the field of finance services a new definition.
During the seminar, Al-Rushaid discussed the impact of liquidity on the value of shares of listed companies, highlighting its contribution to improving company ratings, reducing the costs borne by the investor in the event of buying or exiting, and reducing volatility by closing gaps. in orders, making the stock more attractive and reflecting its true value. Adequate liquidity also helps reduce the company’s cost of borrowing, diversify the investor base and provide an opportunity to enter emerging market indices.
Al-Rushaid also discussed how a market maker guarantees the provision of liquidity on the stock, stating that the market maker is mandated by the exchange to trade at least 10% of the stock’s overall trades, in addition to provide offers and requests within one year. certain framework, depending on the liquidity tranche in which the stock is located. Furthermore ; the exchange requires market makers to appoint accredited system providers, to ensure that they perform these specific tasks. It is also required that the trader has scored at least 5 years of trading experience.
Al-Rushaid shed light on the demand for cooperation with the Market Maker by companies who qualify for the first market, knowing that it provides companies with an opportunity to reach the first market or maintain a stable presence in the first market. .
In response to a question about the cases in which the market maker encounters difficulties in providing liquidity, Al-Rushaid said that the most important of them is the lack of liquidity on certain stocks, in which case the solution is to lend the market maker shares of the company, or list more than one market maker in the stock. He added that it is however very difficult to raise cash from scratch; trading can be reinvigorated by filling the order books with bids and asks, in addition to the presence of stocks borrowed from the Market Maker, which can help increase liquidity on passive stocks.
In 2020, Markaz announced that it has been officially approved to operate as a Market Maker in the Kuwait Capital Market, making it one of the first companies in Kuwait to take on this role. Reflecting its commitment to supporting the development of the Kuwaiti market and building credibility with its customers and stakeholders, to date, Markaz has been appointed Market Maker for Boursa Kuwait, Al Eid Food Company, Gulf Cable and Electrical Industries Company” Cable”. , Kuwait Real Estate Co., Combined Group Contracting Co. and Rasiyat Holding Company. Markaz’s role as a market maker stems from its strong conviction in the impact of this tool on the financial markets in general, and on the shares of listed companies in particular, and is keen to participate in raising awareness of its importance among key market players.
It should be noted that market making services are primarily aimed at finding a continuous balance between supply and demand and closing the gap between the buying and selling prices, which can contribute to the flow of liquidity by favor of listed companies, in the market to which these services are provided. This will in turn have a positive impact on the company’s borrowing costs and support its shares trading at a rate closer to its fair value. In addition, market making services encourage more companies to list their shares on the stock exchange, which ultimately supports the overall development of the Kuwaiti economy.
About Kuwait Financial Center “Markaz”
Established in 1974, Kuwait Financial Center KPSC “Markaz” is one of the leading asset management and investment banking institutions in the MENA region with total assets under management of over 1.16 billion from KD as of June 30, 2022. Over the years, Markaz has pioneered innovation. by developing new concepts resulting in the creation of new investment channels. These channels have unique characteristics and have helped Markaz broaden investors’ horizons. Examples include Mumtaz (the first national mutual fund), MREF (the first real estate investment fund in Kuwait) and Forsa Financial Fund (the first and only GCC options market maker since 2005), all conceptualized , established and managed by Markaz. Markaz was listed on the Kuwait Stock Exchange in 1997.
For more information, please contact:
Sondos S. Saad
Department of Media and Communications
Kuwait Financial Center KPSC “Markaz“
Email: [email protected]