The CBB’s Capital Markets Supervision Directorate (‘CMSD’) is mandated to supervise and regulate the Kingdom’s capital markets; its main objective being to maintain a transparent, fair and efficient capital market for ensuring investor protection, thereby protecting Bahrain’s integrity and reputation as the region’s leading financial centre.
In pursuing its mandate, the CMSD strives to comply with all relevant international standards, in particular those of the International Organization of Securities Commissions (IOSCO). Bahrain was last reviewed for compliance with IOSCO’s core principles in 2005-06, by the IMF and in 2008 became a signatory to the IOSCO MMOU concerning consultation and cooperation and the exchange of information.
All regulations relating to Capital Markets in Bahrain regulations are under Volume 6 of the CBB Rulebook.
The CBB is countinously working in completing the implementation of its plan for the development and updating of the legislative, regulatory and supervisory framework for the capital market sector, in line with international standards and best practices in consultation with the stakeholders and interested parties in this sector and all other financial sector components in Bahrain. Consultations papers can be viewed on the CBB website by clicking here.
Final versions of the modules are available in the Rulebook section of the website and can be viewed on the CBB website by clicking here.
Functions & Contact Details
Regulates and supervises licensed exchanges, clearing houses and central depositories.
Regulates and supervises licensees that are members of licensed exchanges, clearing houses and central depositories, with respect to their activities on those exchanges;
Approves the listing and/or public and private offerings of securities; To ensure the implementation of the disclosure standards, corporate governance principles and the compliance of the listed comapnies.
Undertakes market surveillance, Conduct investigations and apply enforcement measures.
Undertakes investor education initiatives.
Regulate acquisitions, mergers, takeovers and repurchase of shares in fair and transparent manner.
CMSD may be contacted at:
The Director Capital Markets Supervision Directorate The Central Bank of Bahrain PO Box 27 Manama Kingdom of Bahrain
The CBB’s supervision of licensed exchanges consists of on-site and off-site supervision.
The purpose of the CBB’s supervision and monitoring is to ensure compliance by the licensed exchanges with CBB requirements stipulated in the Central Bank of Bahrain and Financial Institutions Law 2006 (‘CBB Law’), rules and regulations in general and the Markets and Exchanges (MAE) Module of CBB Rulebook Volume 6 in particular.
Licensed Clearing, Settlement and Central Depository Systems
The CBB’s supervision of licensed clearing, settlement and central depository systems consists of on-site and off-site supervision.
The purpose of the CBB’s supervision and monitoring is to ensure compliance by the licensed clearing, settlement and central depository systems with CBB requirements stipulated in the Central Bank of Bahrain and Financial Institutions Law 2006 (‘CBB Law’), rules and regulations in general and the Clearing, Settlement and Central Depository (CSD) Module of CBB Rulebook Volume 6 in particular.
Market Intermediaries and Representatives
The CBB’s supervision of licensed market intermediaries consists of on-site and off-site supervision.
The purpose of the CBB’s supervision and monitoring is to ensure compliance by the licensed market intermediaries with CBB requirements stipulated in the Market Intermediaries and Representatives (MIR) Module of CBB Rulebook Volume 6.
Issuance, Listing and Corporate Restructure
The CBB acts as the listing authority. It reviews prospectuses for initial and public offerings, right offerings of securities and private placements memorandums.
The Offering of Securities Module of the CBB Rulebook volume 6 formulates the regulatory framework of the CBB to govern the issuing and offering of securities in/from the Kingdom of Bahrain and provides for timely, comprehensive and specific disclosure requirements and conditions applicable to public offerings and initial listings; contents of the prospectus. The Module also contains equivalent requirements applicable to debt securities on the Issuing, Offering and Listing.
Also, the Takeovers, Mergers and Acquisitions Module of the CBB Rulebook volume 6 provides an orderly framework within which take-overs, mergers or acquisitions are to be conducted and sets forth special requirements relating to timing and mode of offer, announcements, documentation and disclosure of adequate information to enable shareholders to make an informed decision as to the merits of an offer relating to a takeover, merger or acquisition.
CMSD intends to develop investor education programmes, for instance through the distribution of brochures, and presentations to schools and universities.
CMSD also supports the work of the Compliance Directorate, which is mandated to combat financial crime, in identifying any attempts to defraud investors. Investor alerts- for instance relating to boiler room scams- are posted on the consumer information section of the CBB website.
Investigation & Enforcement
To undertake Investigation of breaches of laws, rules and regulations and ensure an effective enforcement of regulatory requirements.
Bahrain Bourse (BHB)
Bahrain Bourse (BHB) was established as a shareholding company according to Law No. 60 for the year 2010 to replace Bahrain Stock Exchange (BSE) that was established in 1987. As 2019 commenced,the bourse has grown in the number of listed securities with 44 equities at a US$21.75 billion market capitalization, 21 bonds (both conventional and Islamic) and Treasury Bills and 17 mutual funds currently listed.
Trading is carried out through 11 securities brokers active in the market and day-to-day trading takes place through the Automated Trading System (ATS).
Bahrain Financial Exchange (BFX)
The Bahrain Financial Exchange (BFX) was established as a multi-asset exchange to list derivative and cash instruments on multiple asset classes such as currencies, commodities, and securities related products for trading. Bait Al Bursa is an Islamic finance division of the BFX exclusively offering electronic exchange traded Islamic financial instruments. Bait Al Bursa signifies the ‘Home of Exchanges’, and represents the BFX’s vision of providing a single venue for all exchange traded business in the Islamic finance sector.
The CBB has granted the BFX ‘final approval’ on 18th October 2010, as per the CBB Law and the Markets and Exchanges (MAE) Module of CBB Rulebook Volume 6.
It is owned by the Financial Technologies Group which is a global leader in creating and operating technology centric, next-generation financial markets that are transparent, efficient, and liquid, across multi-asset classes including equities, commodities, currencies and bonds, among others.
To date, the CBB has approved products for trading on the BFX platform including the Gold Futures, the Natural Gas Futures, the Euro-US Dollar Futures, the USDINR Index Futures and Dow Jones Safe India Index Futures.
Bahrain Clear (BHC)
BHC is a fully owned subsidiary of Bahrain Bourse, which was incorporated in Bahrain on 17th July 2017 and licensed by the CBB as a Clearing, Settlement and Central Depository System. BHC is engaged in managing the shareholders share book of the listed companies and registering members to the Central Depository System for the purpose of trading as well as providing securities services to the custodian. The systems used by BHC are automated which ensure a fast and efficient trading process, ensuring delivery versus payment on a T+2 basis.