Oliver Wyman and FIS support Boursa Kuwait with market making

Boursa Kuwait is collaborating with two consulting firms as part of its plans to encourage investors to ramp up their investments in Kuwait.

Established in April 2014, Boursa Kuwait is Kuwait’s stock market. Following a preparation and transition period of around 2,5 years, Boursa Kuwait formally assumed responsibility for the management of the Kuwait Stock Exchange (KSE)’s operations in October 2016, replacing the government-owned Kuwait Stock Exchange (KSE).

The switch of ownership was part of a large scale privatisation agenda in Kuwait launched years ago. The original plans for the stock exchange transition were officially ratified six years before the privitisation was effectuated, yet political objections and bureaucratic resistance hampered the progress of the plans. However, following a period of sustained low oil prices, which saw Kuwait face back-to-back budget deficits, the state speeded up the hand-over process from KSE to Boursa Kuwait. The strategic roadmap and implementation of a detailed operational plan, to ensure a smooth transition of stock market operations, was developed in close collaboration with the Capital Markets Authority (CMA). 

Boursa Kuwait

With a privatised stock exchange in place, Kuwait’s authorities aim at improving the state’s financial markets and attract more foreign direct investment from abroad. At a broader level, Boursa Kuwait is regarded as a key enabler of the ‘New Kuwait 2035 Vision’, which outlines several plans to successfully navigate Kuwait through the great change and opportunity the future holds. Although the total value of traded shares on Boursa Kuwait are behind that of rival bourses in the region, the stock market can build on its long standing track record – Kuwait’s bourse is the oldest stock exchange in the region, established in 1962.

As part of its growth strategy, Boursa Kuwait is working closely together with two global consulting firms. Oliver Wyman, a management consulting firm with Middle East offices in Abu Dhabi, Dubai and Saudi Arabia, is supporting the bourse with the realisation of its strategic plans. In the latest endeavour of their collaboration, the two parties teamed up in November to organise a workshop for (foreign) investors. Held at Boursa Kuwait’s premises, the half-day workshop saw Oliver Wyman presenting an overview of market making, including an overview of different working models for setting up a market maker scheme to attract potential firms, its benefits and key considerations to Boursa Kuwait and investment companies. 

Market making is seen by Boursa Kuwait and Oliver Wyman as a crucial tool for boosting the liquidity of securities listed in the stock market, as well as improving productivity in the landscape. 

The workshop was divided into five different sessions, covering topics such as Capital Market trends, role of Market Makers and incentive structures, Risk Management tools for market makers, and Case study examples on Market Making from peer markets. This was followed by a Q+A session in which investment companies had the opportunity to interact with Oliver Wyman, with offices in 50+ cities across 26 countries one of the globe’s largest consulting firms, and a top ten strategy & operations player.

Oliver Wyman and FIS

Oliver Wyman has been a familiar face in Kuwait’s financial markets in recent years. In May last year, Bloomberg unveiled that Kuwait’s officials had called in the management consultancy to advise it on how the state could restructure its growing state debt. The debt strategy delivered led to a number of recommendations, with tapping the global bond market one of the key ones put forward to help Kuwait plug its budget gap amid slumping oil revenues.

A week later, Boursa Kuwait hosted its second market making workshop, this time in collaboration with FIS, a global service provider of technology solutions to the financial services industry and a large shareholder of Capco, a consulting firm to the financial services industry. The half-day workshop saw FIS provide a background on market production, the goals behind it and the important tools and devices needed. The workshop also looked at key regulations and standards that need to be adhered to when dealing on local, regional and international stock markets. 

Commenting on the two workshops, a spokeperson of Boursa Kuwait said, “Our aim is to maintain transparency, provide world class services and products that will position Boursa Kuwait as a leading stock market in the region. To achieve this, we have conducted a series of trainings and awareness workshops providing full details on each to further educate stakeholders on Boursa Kuwait’s products and services.” 

Last week, Boursa Kuwait took another step in strengthening its footprint with the announcement of plans for market segmentation, which divides the market into three segments: Premier Market, Main Market and Auction Market. The move is seen by analysts as a large step in bolstering liquidity. Globally, market segmentation is a common practice – London Stock Exchange, Deutsche Borse and NASDAQ for instance have similar approaches in place and have benefited from it.