The Kuwait Clearing Company (KCC) announced the introduction of a new consensual securities lending and borrowing service for traders on the Boursa Kuwait, writes Arab Times. This development marks a strategic enhancement aimed at providing innovative investment tools and boosting the efficiency of Kuwait’s financial markets.
In a recent press statement, the Kuwait Clearing Company (KCC) highlighted that the new service follows a decision by the Board of Commissioners of the Capital Markets Authority, made on Aug 21, to amend the rules governing the KCC. This amendment regulates the consensual lending and borrowing of securities.
The company emphasized that this new service responds to investor demand for additional investment opportunities and is designed to facilitate short selling operations. It complements existing services such as central lending and borrowing and the securities lending and borrowing service available to market makers.
The consensual securities lending and borrowing service allows for the temporary transfer of securities ownership between two parties, based on mutually agreed terms including guarantees, duration, and decision-making mechanisms. This service provides a new option for covering short selling positions, expanding the range of tools available to traders.
To utilize this service, traders must work through a qualified custodian or a registered securities broker on the stock exchange, adhering to the requirements outlined in the Kuwait Clearing Company’s rules manual. The KCC also cautioned traders about the inherent risks associated with short selling, noting that positions could face potentially unlimited losses if securities prices rise unexpectedly. The company stressed the importance of a thorough risk assessment before engaging in such trades.