The Capital Markets Authority (CMA) issued last week two decisions that regulate the work of financial institutions and control investment activities.

The first decision regulates brokerage activities performed by financial institutions, including banks that deal with financial transactions in favor of their clients or for their own.

The decision mandates that brokerage firms should be registered at the CMA, and to ensure that all legal conditions are met.

The decision also stipulates that the transfer of shares constituting more than ten percent of the total outstanding amount, among brokerage firms, should also be approved by the CMA. This is also applicable when the transferor or transferee is a member of the Board of Directors.

The decision sets the minimum required capital for local brokerage companies, as well as the capital to be met by the branches of foreign brokers that apply for a license in the local market.

Brokerage firms are divided into three categories with the capital ranging between a minimum required of LL7.5 billion ($5 million) and LL2 billion ($1.2 million).

Local brokerage companies willing to open branches abroad should also obtain a license from the CMA. Licenses should also be obtained by brokerage companies willing to open more branches locally or to change the location of their branches.

The second decision is related to collective investment schemes. No entity is allowed to solicit or accept savings with the aim of placing them in funds or private equity companies, unless it is licensed by the CMA.

Promotion in favor of foreign collective investment schemes or products is not allowed, as well as selling their shares or stakes in the local market, unless these products are licensed by the CMA.

Nearly identical measures were previously enforced and handled by the Central Bank (BDL). They are now issued by the CMA as it has become the official authority to organize the local capital market.