Kuwait Stock Exchange, the Arab world's second largest, is mulling launching an over-the-counter market in 2011 mainly for troubled listed firms, its director said. "The management of the bourse will submit this proposal to the bourse committee in January (2011) and God willing it could be set up in 2011," Hamed al-Saif, the director of Kuwait Stock Exchange told Reuters in an interview.
This market will be set up for companies that trade below 100 fils per share, Saif said, adding that the bourse will filter the firms based on certain criteria including their financial results and core business. "There are some companies that trade below 100 fils, and are affecting the main index. We will look into their financials, their core business, their trading activity and based on that the decision will be taken if they should be moved to the over-the-counter market," he said.
The Gulf Arab state's stock market has 86 firms which trade below 100 fils per share, out of 212 listed firms. The bourse currently has two markets, the main trading market and the parallel market. "New unlisted firms that want to try trading, before being able to list on the main market could also apply to list on the over-the-counter one," Saif said.
Last year, the stock exchange signed an 18.3 million dinar deal with Nasdaq OMX Group Inc for a new trading system, which would include a platform for equities, bonds and derivative trading. This index which is expected to run by the end of 2011, Saif said, will include 15 of the blue chips trading in the bourse.
"The 15 firms in the index will be changed every six months, based on each firm's capital and financial results," he said. The new index will make it easier, especially for foreign investors who want to invest in the best stocks trading in the market, Saif added.