RIYADH: The Bahrain Bourse has introduced a new regulatory framework for market making and updated the rules for liquidity providers to advance capital and bolster its funds.
The initiative, approved by the Central Bank of Bahrain, aims to align the exchange’s practices with international standards, benefiting investors and market participants.
Effective July 28, existing market makers will be certified as liquidity providers, and a transition period will be granted to ensure compliance with the updated guidelines.
The decision is part of the Bahrain Exchange’s broader efforts to modernize and enhance the nation’s financial markets. It aims to attract international investors, increase market participation, and ensure a robust trading environment.
These changes are expected to play a pivotal role in Bahrain’s economic development, reinforcing its position as a regional financial hub.
Abdulla Janahi, the senior director of trading operations at the exchange, said: “The new rules are part of Bahrain Exchange’s ongoing strategic efforts to increase market activity, enhance the price disclosure process, and improve market efficiency through better order execution.
“Enhancing market activity is a fundamental element of our strategy to develop the capital market infrastructure in Bahrain,” he added.
Janahi encouraged interested members to contact the trading operations department and submit the necessary documentation, which is available on the Bahrain Exchange website.
The framework introduces two membership types to enhance market activity, including liquidity providers and market makers.
The former will support trading by placing continuous buy and sell orders for specific stocks on behalf of issuing companies. Meanwhile, market makers will manage funds for specific stocks, maintaining trade flow by placing buy and sell orders as stipulated in agreements with the exchange.
These deals detail obligations, such as minimum periods of activity, order sizes, and required levels of liquidity.
Both types of participants must meet licensing requirements set by the Central Bank of Bahrain and obtain accreditation from the Bahrain Exchange.
This dual-layered approval process ensures that only qualified entities can participate, thereby maintaining market integrity and stability, the Bahrain News Agency reported.
In September 2023, the Bourse issued a consultation paper on the new market-making rules, inviting feedback from market participants.
This regulatory overhaul is expected to significantly enhance activity, attract more investors, and improve the Bahraini capital market’s overall efficiency and transparency.
