The form will help monitor segregation of customer funds at the end of the first trading day of each week and will be required to be filed with the capital markets watchdog the next day to enhance the regulatory processes under Article 157 of the executive regulations of the Capital Market Law, which provides that funds belonging to customers shall be deposited and kept in separate bank accounts of brokerage companies to settle obligations resulting from sale and purchase of securities. Customer 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 at CMA, said the form was prepared in line with best regulatory arrangements to apply the rules for segregation of customer funds from the funds of companies operating in the field of securities and to provide robust measures for protection of investors’ funds recorded in the books of companies and to ensure they are not used for other purposes to boost investor confidence in the companies and the market in general.
Sharji said the CMA has been closely monitoring segregation of customers’ funds regularly according to the audit plan of licensed companies in accordance with the provisions of Article 157 of the executive regulation.
He added that the weekly audit and companies’ compliance with filling segregation forms would enhance the level of investor confidence in the MSM and the licensed companies operating in the field of securities. He added the actual implementation of the form and its requirements will commence from next month.