Arab Monetary Fund Releases “Guiding principles for supervisory authorities to deal with the impact of the crises on capital markets in the Arab countries”
The guiding principles provide good practices to support mitigating crises impact, such as:
Establishing a crisis management committee within the Securities Commission
Emphasizing the responsibilities of the boards of directors in promoting disclosure
Reviewing the margins of stock prices fluctuation, stop trading for a period if shares prices are sharply declining, reduce the number of daily trading hours
Reviewing the impact of the short selling operations, licensing and activating the role of market makers
Directing listed companies to hold general assemblies using technologies
To promote transformation of the Arab capital markets into digital era.
Establishing SMEs & startups shares trading platforms, raising financial awareness and community outreach to mitigate the negative effects of speculations during crises
In the framework of the cooperation between the Arab Monetary Fund (AMF) and the Arab Securities Authorities to support the development of capital markets and securities sector in the Arab countries, the (AMF) has issued a “Guiding principles for supervisory authorities to deal with the impact of the crises on capital markets in the Arab countries”.
The guide covers a set of guidance driven by well-known best practices globally and regionally in dealing with crises in general, while emphasizing the importance to establish a crisis management committee within the Securities Commission in such circumstances. In addition, the guide considers the need as well for setting interim controls to regulate dividends distribution in coordination with relevant stakeholders and holding bonuses to members of the Board of Directors and sub-committees. Moreover, and in order to alleviate the pressure on market liquidity, the guide proposes to review listed company’s capital increase requests through offering new shares / underwriting rights and to consider postponing them, along with to look at the possibility of postponing the privatization of government companies.
From another hand, and in order to protect investors from sharp declines in stock prices during the crisis, the guide suggests to review the daily fluctuation of stock prices, holding trading for a certain period, reducing the number of daily trading hours, and reviewing the impact of short selling and the possibility of suspension, as well as licensing, activating and encouraging the Market Makers to support the balance of the capital market.
Additionally, the guide emphasizes the importance of the usage of new technologies and invites listed companies to hold general assemblies through online solutions, as well as encouraging the adoption of technologies in processing transactions, drawing the road for an effective digital transformation in Arab stock exchanges and thus enhancing its efficiency.
The guide also calls to pay more attention to stock trading platforms for small and medium-sized companies and startups, to secure affordable conditions while providing them with financing opportunities.
In order to encourage trading in stock markets, the guide proposes to review and commissions fees regulations and consider as well applied taxes on securities.
Furthermore, in order to support the listed companies, the guide suggests that banks should reschedule unpaid loans of listed companies without additional costs, as well as considering the feasibility to establish a special fund with affordable financing terms to support corporate sector.
Finally, the guide raised the necessity of adopting an action plan to prepare for the post-crisis period to ensure a prompt and effective economic recovery, as well as enhancing financial awareness and community outreach, to mitigate the negative effects of speculations with the ultimate objective to reassure investors.
In this occasion, H.E Dr. Abdulrahman Al Hamidy, Director General Chairman of the Board of the AMF has expressed his pleasure for the issuance of these set of principles, as they come in the right time and emphasize the interest of the Arab Monetary Fund in maintaining the efficiency and safety of Arab capital markets during crises and beyond. His Excellency emphasized also that the AMF continues supporting the progress and development process pursued by all capital markets in the Arab countries in order to consolidate sound practices as they are closely related to financial, economic and social stability in the Arab countries. H.E reiterated his warm wishes to safeguard the Arab region and all countries across the world from this critical crisis.
The “Guiding principles for supervisory authorities to deal with the impact of the crises on capital markets in the Arab countries” could be accessed through AMF website at the following link