MUSCAT, SEPT 23
The Financial Services Authority (FSA) of the Sultanate of Oman has unveiled key features of the executive regulations for the Securities Law, marking a significant step toward reshaping the capital market ecosystem. The regulations aim to attract domestic and foreign capital, diversify financing and investment instruments, support economic growth, and contribute to the objectives of Oman Vision 2040.
Speaking at a press conference, FSA Executive President Abdullah bin Salim Al Salmi said the regulations establish an advanced framework for the productive economic utilization of national wealth and assets. By enabling capital market institutions to provide alternative financing solutions, the framework seeks to channel savings toward existing and new productive and service-oriented projects, stimulate economic activity, and create employment opportunities for Omani youth.
Ahmed Al Maamari, FSA Deputy Executive President, noted that the executive regulations aim to enhance the capital market's readiness and performance by fostering a more efficient financing and investment environment and boosting market competitiveness in line with national economic growth requirements.
He highlighted that the new regulations focus on elevating governance standards and operational efficiency across capital market institutions, investment banks, and collective investment funds, while also activating the role of investment banks in invigorating the primary issuance market and supporting overall market activity.
Al Maamari added that separating banking operations from securities-related investment activities establishes a more efficient framework for risk management and investor protection. Furthermore, the regulations allow for the piloting of fintech-related activities without requiring prior specific legislation for each activity; this paves the way for innovation and attracts new investments while safeguarding market integrity and protecting market participants.
The regulations also govern the operations of local and international credit rating agencies in Oman, thereby strengthening the capital market's institutional infrastructure and facilitating the provision of more comprehensive credit information to investors.
INVESTOR PROTECTION AND RISK-BASED SUPERVISION
The regulations strengthen investor protection by requiring stricter segregation of client funds and assets from those of licensed securities entities. Enhanced supervision and periodic reporting will enable the FSA to monitor compliance and reduce risks associated with bankruptcy or liquidation.
The framework also adopts a risk-based supervisory approach covering capital adequacy, risk management, business continuity, operational and technological systems, and financial and operational reporting. These measures strengthen the Authority’s ability to intervene at an early stage when risks could affect institutional soundness or financial stability.
The regulations are designed to improve market readiness, financing efficiency, investment opportunities, and competitiveness. They also strengthen governance and operational efficiency across capital market institutions, investment banks, and collective investment funds, while enhancing the role of investment banks in primary issuances.
INVESTMENT BANKING AND MARKET DEVELOPMENT
The regulations require the separation of investment banking and securities-related activities from other financial operations, supporting stronger risk management, institutional segregation, and investor protection. Existing banking institutions have up to 3 years to align their operations with the new requirements, while banks may combine licensed commercial activities with certain functions, including custody, trusteeship, and underwriting.
Licensed investment banks may provide investment management, product structuring, securities portfolio management, investment research and advisory services, issuance management, and underwriting of approved offerings. These provisions are intended to expand financing solutions and facilitate greater use of capital market instruments by companies and growth-oriented projects.
DIVERSIFICATION OF INVESTMENT FUNDS
The regulations expand collective investment funds to 11 categories: mutual funds, liquidity funds, real estate funds, debt instrument funds, fund-of-funds, index funds, private equity funds, endowment funds, green funds, sustainability funds, and venture capital funds
This broader range of products provides investors with greater choice while creating potential financing channels for startups and high-growth enterprises. The FSA Board may also license additional fund categories as market needs evolve.
MARKET INTEGRITY AND FINANCIAL INNOVATION
The regulations introduce detailed measures to combat market manipulation, including wash trading, transactions without genuine changes in ownership, orders entered without an intention to execute, and artificial manipulation of opening and closing prices. They also prohibit practices designed to artificially inflate or reduce securities prices and prevent brokerage firms from exploiting client orders or engaging in front-running.
For financial innovation, the regulations establish a regulatory pathway for fintech activities and innovative financial instruments not covered by existing legislation through a regulatory sandbox. This approach complements the framework issued under Royal Decree No. 20/2024 concerning temporary licenses and supports the development of non-banking fintech activities.
The FSA has set January 27, 2027 as the deadline for entities subject to the regulations to align their status, while banking institutions have a 3-year period for compliance with securities activity requirements.
CAPITAL REQUIREMENTS AND MARKET INFRASTRUCTURE
Article 18 establishes minimum paid-up capital requirements according to the nature of each capital market activity. The minimum is RO 10 million for the securities exchange, RO 5 million for the depository institution, RO 3 million for the clearing institution, RO 3 million for the settlement institution, and RO 4 million for the central counterparty.
These capital requirements are designed to strengthen the financial resilience of market institutions, reduce financial and operational risks, and enhance their ability to meet obligations. Collectively, the reforms seek to move Oman’s capital market beyond a primary focus on trading toward a more integrated ecosystem encompassing asset management, investment banking, market making, product structuring, credit rating, and investment funds, thereby enhancing market depth, efficiency, and the mobilization of savings toward productive investment.
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