Qatar Stock Exchange and Qatar Financial Markets’ Authority are currently putting the final touches on market making rules activities intended to be carried out by the financial services companies, members in the market after obtaining the necessary licenses from the QFMA to practice such activities in accordance with the rules set by the QFMA within the framework of its efforts to develop the activities and financial services relating to Qatar’s capital market, and implement the strategic targets aimed at promoting the Qatari capital market to be an ideal model of providing financial services according to the best international standards along with enhancing liquidity for support and development of the stock exchange.
A spokesman for the QSE said that carrying out the market making activity by the licensed financial services firms expected in the second half of the year 2017 will help enhancing the market liquidity of eligible securities. According to the rules, the market maker (the brokerage company which is a member of the Exchange) shall, pursuant to a license obtained from the QFMA, provide quotes in one or more eligible securities to enhance its liquidity in a manner specified in the agreement signed between the exchange and the market maker setting forth the terms and conditions the market maker is entitled to comply with.
According to the market making rules, the market maker has to sign an agreement with the issuer setting the rules and conditions to be followed in order to enhance the liquidity of the admitted security of the issuer and should comply with all the regulations of the Exchange and the market making rules. The market making activities could be only practiced by the Financial Services Firm, member of the Exchange, the spokesman noted.
He added that the market making rules have specified a number of criteria and conditions that should be met by the Financial Services Company for obtaining the market making license from QFMA. Among those conditions is to have the capability, systems and controls required for market making; any additional capital adequacy requirements the Exchange may impose for market making; the systems, procedures and controls in respect of managing the risks associated with market making and some other requirements related to training, and competency of the of the firm personnel involved in market making.
He stated that according to the rules, the QFMA has the right to suspend or terminate any Market Maker Agreement in order to maintain the integrity of securities trading, and that the rules give the Exchange the right as well to suspend or terminate any Market Making Agreement in the event of non-compliance with any of the agreement’s conditions or any breach of Law No (8) of 2012 regarding QFMA as amended, the regulations, rules and decisions issued in implementation thereof , or the Exchange’s rules, and shall notify the Authority of measures taken against such market maker.
The spokesman ended his statement by noting that the Financial Services Firms may, after the issuance of the market making rules officially by the QFMA and after meeting all the requirements, apply to QFMA to obtain the license prior to signing market making agreements with the Exchange and issuers wishing to enhance liquidity on their admitted securities.