Banks ask CMA to amend exec regulation of Law No. 7 of 2010
Bid to allow exclusion of pledged investment, portfolio to guarantee indebtedness
KUWAIT CITY, June 25: The banks have asked the Capital Markets Authority to amend the executive regulation of Law No. (7) of 2010 to allow the exclusion of the pledged investment portfolio to guarantee indebtedness, so that the pledged portfolio remains in the name of the heirs in the event of the death of the owner, freezing the account of the deceased or transferring its components only after payment of the full debt of the portfolio, reports Al-Rai daily quoting reliable sources.
The sources pointed out that the ‘Markets Authority’ has responded to the Kuwait Banks Union in this regard, and said it will study the proposal before amending the provisions of the fourth item of Article (3.2-5) of Chapter V, the rules of the investment portfolios of the financial markets, (customer funds and assets) of the same regulation.
At the same time, the authority has rejected a proposal by the Union to amend the provisions of Article 9 (13) of Chapter 9 of the document of the Implementing Regulations to ensure equality in procedures for the sale or ownership of encumbered securities between cases where a professional agent, and cases in which the current customer is a regular non-professional, so that the procedures become one in both cases, as the justification for the distinction between the two, especially if it is the creditor bank or financial institution.
Securities
The Board of Markets Authority stated that Article 9 (13) of Chapter 9 (Securities) of the document (dealing with securities) of the Executive Regulations of Law No. (7) for the year 2010 regarding the establishment of the ‘Markets Authority’.
The activity of the financial markets and its amendments have come to regulate a special provision, which is the procedure for the possession of the mortgage creditor if it is a bank or a financial institution for the mortgaged property, if the debtor or the current debtor breaches the obligations of the debtor if it is a professional agent. The scope of its application does not extend to the debtor or the current one if it is a normal customer.
The Securities Authority said that this does not necessitate the amendment of Article 9-13, since its special provisions cannot be applied against all pledgers without distinction between them, even if the mortgagee is (in any case) a bank or financial institution.
The Association of Banks also requested the Securities Authority to issue an explanatory
memo of the text of Article 9-18 of Chapter 9 of the document (dealing with securities) of the Executive Regulations to indicate whether it requires that the current client be a professional agent so that the creditor can sell the encumbered securities if the current bidder refuses to pay the guarantee or the date has elapsed without this supplement.
Memo
However, the ‘Markets Authority’ reported on this issue that there is no need to issue an explanatory memo for the provision
of the article referred to in this regard, explaining that it addresses in general whether a professional or ordinary client, has the right of any mortgagee creditor to grant a date in time to supplement the guarantee in the event of a decrease in the price of the security listed and mortgaged on the stock exchange for the value of the debt.
If the current person refuses to supplement this guarantee or the time limit specified by the creditor expires, the creditor may sell the securities in the place of foreclosure.
The Union of Banks pointed
out that despite the great qualitative boom that was promulgated by Law No. (7) of 2010 regarding regulating the activity of securities and the creation of the Capital Markets Authority and its amendments, in organizing this vital economic activity, in particular the issuance of the executive regulations of the law, which included rules and procedures for the preference of the work and implementation of the law, but the practical practices opened the door to discuss some of the rules and procedures contained in the regulations listed in this framework.