10/21/2017 9:43:56 AM Market is CLOSED     عربي
Knowledge Center / Trading Information / Settlement

Settlement

An Amiri Decree was issued in December 1986 concerning organizing the trading activities and the clearing system in the Exchange. The decree handed over the duties of administration to the clearing chamber to clear the transaction, or registered shares in the market and to specify the parties and rights of each deal.

Accordingly, the Stock Exchange committee issued resolution No. (3) For the year 1987, relating to the clearing chamber. It indicated that the responsibility lies with the clearing chamber to accomplish all procedures of clearing and to address all registered companies of the latest name of parties holding shares.

In May 1987, a Director General resolution was issued concerning the organization of settlement and transfer procedures for listed shares, The Kuwait Clearing Company (KCC) has been assigned to incur the responsibilities of clearing chamber in the exchange, where the aforementioned company is entitled to settle obligations arising from transactions registered there.

This is done by defining the financial status of both parties involved in the deal, then making clearance of rights and commitments (debts and credits) between each other.

As the system of clearing proved its success, the exchange embarked on its development to help investors make their investment decisions in due time. Hence, a Director General resolution was issued in May 1988 regarding clearing procedures on the basis of net balances. According to the new system, the following day, each broker will receive a report --showing the balance of his clients, from cash and shares-- so that the investor can use his cash or shares in holding a new deal.

In year 2002 due to the flow of new investors and the fact that Stock Exchange has established itself to become a very lucrative market; the administration being keen on developing its resolutions consequently with the blooming of the trading volume, has decided to alter the clearing settlement system to deliver cash or cheque twice weekly Saturday and Tuesday so investors can benefit from their liquidity achieved from trading.


Figures had shown that the applications of such a system led to an increase in trading activity in June 1988 by the ratios: 251%, 339%, and 235.5%, for number of traded shares, its value and number of transactions respectively, as compared to the same variables in the preceding month (May 1988). The application of the new clearing system can be considered as a landmark in the development of the exchange.

A NEW ERA

The recent major improvement in settlement is moving to T+3-settlement cycle. KCC and Boursa Kuwait –in collaboration with CMA- upgraded their systems to accommodate the new cycle. From 21st May 2017 onwards trades are settled on a rolling basis on the third business day. Each trading day is considered as a separate trading period in a rolling basis and trades of the day are settled on net basis for each investor account.

Cash transactions are now executed on a daily basis either through electronic transfer or through checks. Investors do not need to wait for a certain number of days to receive cheque to receive their payments. For more information regarding the T + 3 implementation, please visit www.maqasa.com.

Corporate actions’ procedures are also renewed taking the T+3 settlement cycle into account. The international standards also apply in cum-date, ex-date, record date and payment date. The accounts of investors who have securities on record date will be updated on payment date.