Muscat Securities Market
Encyclopedia
The Muscat Securities Market is the only stock exchange
in Oman
. It was established by the Royal Decree (53/88) issued on 21 June 1988 to regulate and control the Omani securities market and to participate, effectively, with other organizations for setting up the infrastructure of the Sultanate's financial sector.
After ten years of continuous growth there was a need for a better functioning of the Market. Thus MSM has been restructured by two Royal Decrees (80/98) and (82/98).
The Royal Decree (80/98) dated November 9, 1998 which promulgated the new Capital Market Law provides for the establishment of two separate entities, an exchange, Muscat Securities Market (MSM) where all listed securities shall be traded and the Capital Market Authority(CMA) - the regulatory. The Exchange is a governmental entity, financially and administratively independent from the regulatory but subject to its supervision. Thus the securities industry in Oman was well established to enhance investors' confidence by developing and improving all the processes appertaining to the stock market.
As a continuing process in the development of the securities market, the MSM has developed its regulations to provide information and financial data relating to the performance of the Market and all listed companies directly to investors through a highly advanced electronic trading system. This will not only ensure transparency of dealings which is considered to be one of the main principles of fair trading, but will encourage investors to make the right investment decision at the right time.
The Market has developed its existing system of clearance and settlement by introducing a new mechanism for ensuring stable dealings in securities as well as providing a better environment attracting foreign investment into Oman.
The former settlement mechanism was involving only three parties in the clearance and settlement, MSM, Muscat Depository and Registration of Securities Co. (S.A.O.C) and the brokers. The newly introduced settlement formula is through a Settlement Bank (Central Bank)with a Settlement Guarantee Fund (SGF).
SGF has been established with the contribution of all intermediary companies. It aims to guarantee continuation of settlement processes among intermediaries. Where any of the intermediaries is unable to provide the settlement amount the SGF would transfer the deficit to the settlement bank on behalf of the intermediary and then collect the same from the intermediary, thus the settlement would be smoothly completed.
The parallel market has relatively less requirements, and is therefore easier for companies to list on, especially the newly established ones. Third Market consists of companies that are facing financial difficulties.
, services and insurance
, and industry
.
The main objectives of the MSM 30 is to represent the prices movement of the listed shares objectively and to be a benchmark for individual and institutional investors which guides them through their investment processes. To achieve these objectives, the MSM 30 has the following features:
1.Freely available shares for trading are included only. Any shares fall under the following will be excluded:
Founders (exclusion ends when the company issue two balance sheets for two consecutive financial years).
Government holdings.
Strategic holdings (10% or more).
Locked-in shares, which are not tradable for at least 3 months.
2.A 10% capping (CAP) is set to ensure wider representation of smaller company's in the index.
3.The free float and capping revised (re-set) on quarterly basis. The revision is conducted by end of March, June, September and December. The Index sample amendment on the other hand takes place in the beginning of July of each year. The sample is selected based on the applicable selection criteria (Market Capitalization, Liquidity, and Earning per share).
MSM 30 index comprises three sub indices representing the three sectors (
Banking & investment
Industry & Services
Insurance).
Stock exchange
A stock exchange is an entity that provides services for stock brokers and traders to trade stocks, bonds, and other securities. Stock exchanges also provide facilities for issue and redemption of securities and other financial instruments, and capital events including the payment of income and...
in Oman
Oman
Oman , officially called the Sultanate of Oman , is an Arab state in southwest Asia on the southeast coast of the Arabian Peninsula. It is bordered by the United Arab Emirates to the northwest, Saudi Arabia to the west, and Yemen to the southwest. The coast is formed by the Arabian Sea on the...
. It was established by the Royal Decree (53/88) issued on 21 June 1988 to regulate and control the Omani securities market and to participate, effectively, with other organizations for setting up the infrastructure of the Sultanate's financial sector.
After ten years of continuous growth there was a need for a better functioning of the Market. Thus MSM has been restructured by two Royal Decrees (80/98) and (82/98).
The Royal Decree (80/98) dated November 9, 1998 which promulgated the new Capital Market Law provides for the establishment of two separate entities, an exchange, Muscat Securities Market (MSM) where all listed securities shall be traded and the Capital Market Authority(CMA) - the regulatory. The Exchange is a governmental entity, financially and administratively independent from the regulatory but subject to its supervision. Thus the securities industry in Oman was well established to enhance investors' confidence by developing and improving all the processes appertaining to the stock market.
As a continuing process in the development of the securities market, the MSM has developed its regulations to provide information and financial data relating to the performance of the Market and all listed companies directly to investors through a highly advanced electronic trading system. This will not only ensure transparency of dealings which is considered to be one of the main principles of fair trading, but will encourage investors to make the right investment decision at the right time.
The Market has developed its existing system of clearance and settlement by introducing a new mechanism for ensuring stable dealings in securities as well as providing a better environment attracting foreign investment into Oman.
The former settlement mechanism was involving only three parties in the clearance and settlement, MSM, Muscat Depository and Registration of Securities Co. (S.A.O.C) and the brokers. The newly introduced settlement formula is through a Settlement Bank (Central Bank)with a Settlement Guarantee Fund (SGF).
SGF has been established with the contribution of all intermediary companies. It aims to guarantee continuation of settlement processes among intermediaries. Where any of the intermediaries is unable to provide the settlement amount the SGF would transfer the deficit to the settlement bank on behalf of the intermediary and then collect the same from the intermediary, thus the settlement would be smoothly completed.
Market classification
Regular market has strict listing requirements, For listing on this market, companies must have a solid record of profitability.The parallel market has relatively less requirements, and is therefore easier for companies to list on, especially the newly established ones. Third Market consists of companies that are facing financial difficulties.
Market sectors
MSM listed companies are from three sectors: banking and investmentInvestment
Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...
, services and insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
, and industry
Industry
Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...
.
Legislative structure
From its inception, Muscat Securities Market has issued instructions and regulations as required to ensure that it attains its objectives and performs its duties and responsibilities with the utmost efficiency and fairness and in conformity with technical platform of the new electronic trading system with intensive working on solid infrastructure enabling trading through the internet.MSM-30 index
Muscat Securities Market Index has been established in 1992 and the base date was June 1990. A number of companies included in the index sample has changed overtime to reach currently 30 companies the most liquid in the marketThe main objectives of the MSM 30 is to represent the prices movement of the listed shares objectively and to be a benchmark for individual and institutional investors which guides them through their investment processes. To achieve these objectives, the MSM 30 has the following features:
1.Freely available shares for trading are included only. Any shares fall under the following will be excluded:
Founders (exclusion ends when the company issue two balance sheets for two consecutive financial years).
Government holdings.
Strategic holdings (10% or more).
Locked-in shares, which are not tradable for at least 3 months.
2.A 10% capping (CAP) is set to ensure wider representation of smaller company's in the index.
3.The free float and capping revised (re-set) on quarterly basis. The revision is conducted by end of March, June, September and December. The Index sample amendment on the other hand takes place in the beginning of July of each year. The sample is selected based on the applicable selection criteria (Market Capitalization, Liquidity, and Earning per share).
MSM 30 index comprises three sub indices representing the three sectors (
Banking & investment
Industry & Services
Insurance).