Capital Markets Authority Approves Fee and Commission Structure for the Market System

Kuwait Stock Exchange: The Capital Markets Authority has approved amendments to the fee and commission structure of the market system, with implementation set to begin on October 1 of next year.

This step responds to developments in capital markets and aims to enhance the efficiency of the regulatory and operational environment. The Capital Markets Authority approved new amendments to the fee and commission system applied at the Kuwait Stock Exchange as part of a periodic review of market regulations, seeking to balance the interests of all parties and keep pace with continuous growth in trading volumes and the evolution of the market’s infrastructure. These amendments are part of efforts to develop the financial market system, contributing to improved operational efficiency, enhanced competitiveness of the Kuwait Stock Exchange, and the consolidation of a more flexible and transparent investment environment, in line with best practices applied in regional and global financial markets.

The new amendments, published by the Kuwait Stock Exchange yesterday, abolish a 5-dinar fee for the settlement of custody clients’ trades and a 500-fils fee for settlements involving trades exceeding 50 dinars.

The cancellation of settlement fees for custody clients’ trades and certain other settlement fees helps reduce the overall cost of trading, particularly for investment institutions and investors relying on custody services. This move also enhances the attractiveness of the Kuwaiti market, encouraging increased investment activity, especially from institutional and foreign investors, while simplifying the fee structure and reducing operational burdens associated with trade execution and settlement, in line with best practices in advanced financial markets.

The decision also unified the trading commission in the First Market, the Main Market, and fund units to 15 basis points, distributed as 3.7 basis points for the Exchange, 2.9 basis points for the Kuwait Clearing Company, and 8.4 basis points for the broker. Previously, the commission was 10 basis points for the First Market, 15 basis points for the Main Market, and 10 basis points for fund units.

Unifying the trading commission across different segments of the Kuwait Stock Exchange represents a step toward simplifying the fee structure and promoting equality in trading costs among various financial instruments, providing greater clarity for investors and reducing previous disparities between the First Market, the Main Market, and fund units.

The new decision also raised the annual fees payable to the Capital Markets Authority for the Exchange’s licensing to 6% of total trading commissions across the market, up from the current 3%. This reflects a shift toward recalibrating the funding mechanism for the Authority’s supervisory and regulatory role, aligning with the growth in market activity and the expansion of services within the trading system. Financially, this increase does not constitute a direct fee imposed on investors; rather, it is calculated within the commission structure linked to trading activity, meaning its impact is distributed among system participants according to the nature of executed transactions. This step also enhances the Authority’s capacity to support its supervisory and developmental tasks, contributing to improved market efficiency and the sustainability of the regulatory framework, particularly as regulatory and governance requirements grow and financial products and services evolve.

The new decision also increased the minimum trading commission from 250 fils to 500 fils for trades amounting to 333.33 dinars or less, distributed at a ratio of 56% to brokerage firms and 44% to the Exchange and Clearing Company.

This step aims to cover operational costs associated with executing and settling low-value orders, as such trades previously bore a minimum fee that did not always align with the cost of services provided by system participants. The impact of this amendment primarily affects individual investors executing low-value trades, as the relative cost of trading in this category will rise compared to larger-value trades, while the effect on institutional investors and large portfolios with high trading volumes will be limited.