Kuwait unveils bill to punish insider trading and regulate stock market

Kuwait: Kuwait has unveiled a much-delayed bill to set up a financial markets regulator, which stipulates tough punishment for insider trading on a stock market battered by a string of irregularities.

The Opec producer is the only Gulf state which does not have a dedicated authority to supervise its bourse, the second-largest in the Arab world, which has fallen more than 30 per cent this year.

Commerce and Industry Minister Ahmad Baqer told state news agency Kuna late on Monday that the long-awaited bill had been submitted to parliament.

The government had originally hoped to get parliamentary approval for the law last year but those plans were scuttled after a political standoff between the executive and legislative branches led to the dissolution of parliament and new elections.

This time, parliamentary approval is again far from guaranteed as Kuwait is in the midst of another political crisis which led the government to resign last month.

Parliament is now unlikely to convene before the new year.

The 157-article bill calls for the creation of a regulator which is itself monitored by the prime minister. It aims to "stop crimes and violations on the stock market and protect investors", according to a copy published by local newspapers.

The authority will oversee initial public offerings, mergers and acquisitions and will have the power to impose fines of up to 100,000 dinars (Dh1.333 million) and prison sentences up to five years, for violations.

It will also have the power to halt or cancel trading in the bourse in case of crisis or unrest which could damage the stock market. The authority will also be able to do the same in the case of stock manipulation by traders.

Kuwait's stock exchange says it is trying to crack down on abuses that for years have deterred foreign investment in its shares, but has relatively little power to act.

In 2006, it banned the family owned Kharafi Group from using the exchange to trade shares in ten companies after they allegedly violated disclosure rules.

$7.26B for bourse

Kuwait approved a $7.26 billion fund to invest in the local bourse, which has been hit by the global financial crisis, several newspapers said yesterday. The reports said the cabinet approved on Monday a 2 billion dinar government portfolio to invest in the stock market.

Last month the cabinet asked its investment arm the Kuwait Investment Authority (KIA) to set up a fund to invest in the bourse to shore up confidence. Kuwait did not officially reveal the size of the fund, but some local newspapers said it would be in billions of dinars.