Boursa Kuwait, established in April 2014 and fully privatized in December 2019, is the only stock exchange market in the Middle East owned by the private sector. The establishment of Boursa Kuwait aimed to match its capital market activities to international standards through the application of operational and regulatory reform boosting its market activity, increasing liquidity and capital, and establishing wealth.
The establishment of Market Maker services in Boursa Kuwait was among the steps taken to reach the set goals mentioned above.
What is a Market Maker (MM)?
A Market Maker is a firm (broker or investment company) providing bids and asks to investors for one or more securities for a guaranteed number of shares. The objective of a Market Maker is to increase the liquidity for a particular security by placing frequent bids/asks in the market throughout trading hours. In other words, the Market Maker makes it easier for investors and traders to buy and sell stocks at all times, and without a Market Maker, there may not be enough market activities on the security in question.
How is a Market Maker regulated?
Market Makers are regulated by the regulator in the country which can be the Capital Market Authority (CMA). A Market Maker must abide to a list of regulations to be able to run its market. The firm must provide enough daily trades on the security, ensure that trading is available most of the trading hours (a set percentage of the entire time), ensure enough trading volume percentage of the main market activity on that security, and more.
How does a Market Maker generate profit?
A Market Maker generates profit from the spread between the bid and ask prices.
What are the risks faced by a Market Maker?
In normal times, there are financial risks associated with holding assets on the decline. In times of trouble when securities become volatile, Market Maker must remain controlled and fully compliant with regulations, which are mostly set to protect the market maker and the investor.
Market Maker in Boursa Kuwait
Currently, the Capital Market Authority in Kuwait issues licenses to Market Makers. These Market Makers must conduct all the necessary agreements with Boursa Kuwait, the clearance agency, and the broker in order to start its trading activities. These trading activities will be conducted on the Market Maker’s own platform which must be approved and licenses by Boursa Kuwait.
Boursa Kuwait is responsible for validating all activities conducted by Market Makers in Kuwait in order to ensure their full compliance with the set rules and regulations in Kuwait.
What does IDS Fintech have to offer for Market Makers?
IDS Fintech has developed a full-fledged Market Maker solution and has received certification from Boursa Kuwait on 2020. The solution provides Market Makers with all the front-end and back-office tools to run the entire MM activities seamlessly.
IDS Fintech Market Maker was designed to match and comply with all the requirements and regulations set by the CMA and Boursa Kuwait making the solution very safe and reliable for the Market Maker. Each set requirement is validated before, during, and after each and every transaction with proper notification to the user/administrator.
IDS Fintech Market Maker is also fully integrated with VESTIO, the full wealth management solution.
IDS Fintech partners using VESTIO will enjoy the ease of implementation of the Market Maker solution which is easily managed through the same VESTIO’s back office. This integration eliminates redundant work, unnecessary bridging between third-party application, and the need for additional operators to run the system, making IDS Fintech the smart choice for all existing VESTIO partners.