5 th GCC Regulators Summit 16 th Feb 2011- Abu Dhabi

1. 5th GCC Regulators Summit16th Feb 2011- Abu Dhabi Certification of Brokersand Cross-Participation in GCC Markets www.cbfs.edu.om Dr. Ashraf bin Nabhan Al Nabhani College of Banking and Financial Studies- Oman

2. Integration of Market Mechanisms www.cbfs.edu.om • Main Methods of Integrating Market Mechanisms: • Cross-listing of Shares • Alliances among Exchanges • Cross-participation of Exchange Members Integration of market mechanisms is specified as a distinctive form of integration and is distinguished from broader integration processes arising from capital mobility.

3. Proposed Integration Strategy www.cbfs.edu.om • Cross-listing is not effective • Mergers of Exchanges is most ideal, but is difficult to achieve as most GCC markets are still government organizations Cross-participation of Brokers would be a more feasible option

4. Cross-Listing Study www.cbfs.edu.om

5. Results of Cross-Listing Study www.cbfs.edu.om Scope of Study Findings: • Cross-listings do not trade on a regular basis in the subsidiary markets. As not all cross-listings companies traded on a regular basis, avoidance of bias due to stale quotations limited the study to 419 cross-listings. • Even if they do trade, their trading volume is thin compared to the home market trading level • Even if cross-listings levels are low –if it does trade- in the subsidiary market, the stock price is largely affected by the home market price and not importantly influenced by either the trading levels or the systematic risk of the subsidiary market • We studied data of 1400 international cross-listings in major stock markets in the world.

6. Results of a Merger Case Study www.cbfs.edu.om

7. Results of a Merger Case Study Euro Next www.cbfs.edu.om Scope of Study Findings: • Brokers in the European Union prior to the merger had access to various European markets, as brokers were granted what was known as the common passport. • The creation of the common trading platform had only a slight impact on the integration levels between these markets since brokers who already had access to those markets were able to trade freely, before the merger, without barriers. • We studied the impact of a merger of three trading platforms of Paris, Amsterdam and Brussels on the integration levels represented by the co-movement in price returns of two clusters composed of 250 companies classified by large and medium capitalization.

8. Cross-Participation of Brokers www.cbfs.edu.om Proposed Strategy for Integration

9. Cross-Participation of Market Members www.cbfs.edu.om • However, it is essential to introduce an appropriate brokers education policy and to introduce a mandatory certification requirements as a pre-requisite to granting access. • Internationally there are some well reputed professional qualifications that could be considered by the GCC regulators. To consider mutual recognition of GCC Brokers licenses. In other words, to give brokers of the GCC access to the G7 securities markets.

10. Capital Market Authority Licenses Requirements www.cbfs.edu.om • This qualification will be considered as the entry criteria for all brokers. • The qualification includes a Foundation level and a Professional Exam. • The College of Banking and Financial Studies signed agreements with both CISI and the Muscat Securities Market Brokers Association to hold examinations in its venue. The Capital Market Authority in Oman signed an agreement with the Chartered Institute of Securities and Investment (CISI), Uk, whereby all brokers in Muscat will sit for the CISI exams.

11. Advantages of International Professional Education www.cbfs.edu.om • Provides common standards in terms of: • Curriculum • Examination • Continuous Education • Reflects better image of the market • Facilitates brokers mobility between GCC markets or companies.

12. www.cbfs.edu.om Thank You