Capital Markets Supervision Directorate (“CMSD”)

CBB Licensed Capital Markets Participants

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Licensed Self-Regulatory Organizations
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Licensed Members
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Licensed Listed Companies

Capital Markets Licensees under Volume 6

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Licensed Exchanges
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Licensed Clearing, Settlement and Central Depository Systems
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Licensed Securities Broker-Dealers
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Licensed Securities Brokers
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Licensed Crypto-asset Service Providers

The Central Bank of Bahrain’s (‘CBB’) Capital Markets Supervision Directorate (‘CMSD’) is mandated to supervise and regulate the Kingdom of Bahrain’s capital markets; its main objective being to maintain a transparent, fair and efficient capital market for ensuring investor protection, thereby protecting the Kingdom’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 2005-2006, by the International Monetary Fund (‘IMF’). In 2008, it became a signatory to the IOSCO Multilateral Memorandum of Understanding (‘MMOU’) concerning consultation, cooperation and the exchange of information.

All regulations relating to the capital markets in the Kingdom of Bahrain are under Volume 6 of the CBB Rulebook and the designated Capital Market Regulations section on the CBB website.

The CBB is continuously working on completing the implementation of its plan for the development and update of the legislative, regulatory and supervisory framework for the capital markets 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 the Kingdom of Bahrain. Consultation 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.

Complaints which relate to potential cases of contravention of the CBB Law, rules and regulations, or a Self-Regulatory Organization’s (‘SRO’)  business rules in relation to the capital markets in the Kingdom of Bahrain may be lodged using the Complaint Form provided (click here).

Functions & Contact Details

CMSD Functions:

• Regulate and supervise licensed exchanges and market operators;
• Regulate and supervise licensed clearing, settlement and central depository systems;
• Regulate and supervise licensees that are members of licensed exchanges and market operators; and members of clearing, settlement and central depository systems, with respect to their activities on those SROs;
• Regulate and supervise crypto-asset service licensees;
• Approve the listing and delisting of securities;
• Approve public and private offerings of securities;
• Regulate and supervise listed companies;
• Supervise the implementation of the disclosure standards, corporate governance principles and the compliance of the listed companies;
• Regulate takeovers, mergers and acquisition transactions, and repurchase of securities of listed companies;
• Undertake investor education initiatives;
• Undertake market surveillance; and
• Conduct investigations and apply enforcement measures.

CMSD may be contacted at:

The Director
Capital Markets Supervision Directorate
The Central Bank of Bahrain
PO Box 27
Manama
Kingdom of Bahrain

Tel: +973-17 547 907
Fax: +973-17 532 957
E-mail

Licensed Exchanges and Market Operators

The CBB’s supervision of licensed exchanges and market operators 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 and market operators with the CBB requirements as 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 as stipulated in the CBB Law, rules and regulations in general and the Clearing, Settlement and Central Depository (‘CSD’) Module of CBB Rulebook Volume 6 in particular.

Licensed Market Intermediaries and Representatives

The CBB’s supervision of licensed market intermediaries and representatives 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 and representatives with the CBB requirements as stipulated in the CBB Law, rules and regulations in general and the Market Intermediaries and Representatives (‘MIR’) Module of CBB Rulebook Volume 6 in particular.

Crypto-asset Service Licensees

The CBB’s supervision of crypto-asset service licensees consists of on-site and off-site supervision.

The purpose of the CBB’s supervision and monitoring is to ensure compliance by the crypto-asset service licensees with the CBB requirements as stipulated in the CBB Law, rules and regulations in general and the Crypto-Asset Module (‘CRA’) Module of CBB Rulebook Volume 6 in particular.

Issuance, Listing and Corporate Restructure

The CBB acts as the listing authority. It reviews, registers, and files prospectuses for initial and public offerings, right offerings of securities and private placements memorandums.

The Offering of Securities (‘OFS’) Module of the CBB Rulebook Volume 6 formulates the regulatory framework of the CBB to govern the issuing, offering and/or marketing of securities in/from the Kingdom of Bahrain and provides for timely, comprehensive and specific disclosure requirements and conditions applicable to the contents of the prospectus in relation to public and private equity offerings. The Module also contains equivalent requirements applicable to the issuing, offering, listing and/or marketing, for public and private offerings, of debt securities and Islamic Sukuk.

Also, the Takeovers, Mergers and Acquisitions (‘TMA’) Module of the CBB Rulebook Volume 6 provides an orderly framework within which take-overs, mergers and acquisitions are to be conducted and sets forth comprehensive and specific requirements relating to the 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 or merger or acquisition.

Disclosure and Investor Protection

The CBB rigorously oversees the transparency and orderliness of Bahrain’s capital markets by ensuring the effective implementation, by all capital market service providers, of the CBB’s Disclosure Standards and the requirements stipulated under the High-level Controls Module (Corporate Governance) of the CBB Rulebook Volume 6; in order to maintain the market’s confidence and safeguard the interest of the capital markets’ investors.

Investor Education

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.

Market Surveillance

Market Surveillance monitors securities trading activity to detect and prevent any fraudulent, manipulative or abusive trading practices, in order to enhance investors’ confidence in the integrity and fairness of the capital markets of the Kingdom of Bahrain.

Investigation & Enforcement

To undertake investigation of breaches of laws, rules and regulations and ensure an effective enforcement of regulatory requirements.

Self-Regulated Organizations (‘SROs’)

Bahrain Bourse B.S.C. (c) (‘BHB’)

Bahrain Bourse B.S.C. (c) (‘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. In 2019, market capitalization of the BHB stood at USD 26.88 billion. BHB’s listed securities include 44 equities, 14 bonds (both conventional and Islamic), 34 Treasury Bills, 9 Mutual Funds, and 1 new listing in the Bahrain Investment Market (‘BIM’).

Trading is carried out through 12 licensed members and day-to-day trading takes place through the Automated Trading System (ATS).

Bahrain Clear B.S.C. (c) (‘BHC’)

Bahrain Clear B.S.C. (c) (‘BHC’) is a fully owned subsidiary of BHB, which was incorporated in the Kingdom of 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.

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