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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2006 MUSCAT SECURITIES MARKET Ahmed Saleh Al-Marhoon Director General We believe that exchanges that adhere to good governance, greater transparency and greater accountability, are able to foster investors’ confidence as well as creating an attractive investment environment. We are consciously working on developing and operating an efficient and transparent securities market to the best standard expected by our local and foreign investors. We believe that exchanges that adhere to good governance, greater transparency and greater accountability, are able to foster investors’ confidence as well as creating an attractive investment environment. We at Muscat Securities Market (MSM), however, have devised a comprehensive road map that enables us to build capacity and promote sustainable capital market development strategy specifically aimed at improving access to the regional and international capital markets. In view of the above, MSM recently revised its legislation with respect to listing, trading and clearance and settlement regulations to enable MSM to cater for our market demand. One of our eminent projects is to replace the MSM existing trading system with Atos- Euronext Trading System that is used by some western and other emerging stock markets. We expect that the new trading system will be implemented at the end of 2005 and will, inevitably, enhance the capability of MSM and make it the first exchange in the GCC countries that uses this advanced trading system. We are in the process of upgrading MSM website to improve the navigation, content and overall value of the website for users. HISTORY AND DEVELOPMENT The MSM was established by Royal Decree issued on 21 June 1988 to regulate and control the Omani securities market and to participate, effectively, with other organizations for the setting up of 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. The MSM has been restructured by two Royal Decrees (80/98) and (82/98). Royal Decree (80/98) dated 9 November 1998, which promulgated the new Capital Market Law, provides for the establishment of two separate entities: an exchange– the Muscat Securities Market (MSM)– where all listed securities will be traded, and the Capital Market Authority (CMA)– the regulatory body. The exchange is a governmental entity, financially and administratively independent from the regulatory body but subject to its supervision. Thus the securities industry in Oman is well established to enhance investors’ confidence by developing and improving all the processes pertaining to the stock market. There are recent amendments to the Capital Market Law and its executive regulation, which aim at enhancing the efficiency and transparency as well as securing the integrity of the market. The recent enactment of the code of corporate governance and other rules and regulations, during the current year, has a clear effect on the investors’ confidence on the market and is positively reflected in the market index movement. FUTURE OUTLOOK As part of the future vision for the development of activities of the market in 2005, MSM appointed a specialized company to study and evaluate the market in order to draw up a methodological vision for its development as per a specific timetable extending from 5-10 years. The task was entrusted to Atos-Euronext which is specialized in financial consultancy, trading system and electronic solutions. It is currently implementing the new electronic trading system at the market. It is a leading company and very well known for its vast practical experience as it is closely linked with Paris Stock Exchange. It also provides consultancy services to leading European stock exchanges. The market will start to implement part of the recommendations and proposals of the study in 2006 and as per a fixed time frame. The market has already established an action plan for the year 2006. The plan aims at developing work at the market to cover all technical, technological, legislative, and informational and awareness areas. It also aims at developing MSM relationships with other financial markets either to achieve electronic links or to exchange information and experiences. The Action Plan envisions the need to match the new electronic trading system with the requirements of the market after receiving it from the implementing company. It also aims at the implementation of a program that allows for Internet trading as well as the completion MSM connection with Abu Dhabi and Dubai markets. MSM hopes to open a new branch in Sohar and intensify information and media awareness program inside and outside the Sultanate, and update trading laws to keep pace with international developments. PAGE 114
FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2006 MUSCAT SECURITIES MARKET OFFICIAL 6 MONTH STATISTICS US$ millions # Shares millions Total Volume Average Daily Volume Total Volume Average Daily Volume Stocks Jan-06 323.8 18.0 43.0 2.4 Feb-06 203.4 10.2 29.8 1.5 Mar-06 220.3 10.0 39.9 1.8 Apr-06 160.6 8.0 64.3 3.2 May-06 268.5 11.7 119.6 5.2 Jun-06 143.7 6.8 87.9 4.2 TOTAL 1,320.2 10.8 384.5 3.0 Bonds Jan-06 0.48 0.03 0.13 0.01 Feb-06 3.40 0.23 0.15 0.01 Mar-06 0.83 0.04 0.13 0.01 Apr-06 0.18 0.01 0.07 0.003 May-06 0.71 0.03 0.27 0.01 Jun-06 9.84 0.47 0.04 0.00 TOTAL 15.4 0.13 0.79 0.01 Other Jan-06 16.1 1.1 2.3 0.15 Feb-06 75.3 5.0 9.3 0.62 Mar-06 19.7 1.3 4.1 0.28 Apr-06 553.8 36.9 3.2 0.22 May-06 108.1 7.2 45.1 3.01 Jun-06 71.4 4.8 14.9 0.99 TOTAL 844.5 9.4 78.9 0.88 Market Capitalization (US$ millions) Index MONTHLY STOCK VOLUME VS INDEX (US$ millions) Stocks Index MONTHLY MARKET CAPITALIZATION (US$ millions) Jan-06 16,132.5 5,446.3 Feb-06 15,716.7 5,264.9 Mar-06 15,575.3 5,351.5 Apr-06 16,739.2 5,120.0 May-06 15,446.8 4,916.6 Jun-06 15,314.8 4,862.1 CONTACT INFORMATION 350 300 250 200 150 100 50 0 6,000 18,000 5,000 16,000 14,000 4,000 12,000 3,000 10,000 8,000 2,000 6,000 1,000 4,000 2,000 0 0 Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun Contact Name Mr. Talal H. Al Nasseb E-mail talal21@msm.gov.om Website www.msm.gov.om PAGE 115
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