MUSCAT: Muscat Stock Exchange is targeting 2028, in a best-case scenario, for the introduction of derivatives products, with 2027 expected to be devoted to establishing and licensing the independent clearing infrastructure required to support them.
Haitham bin Salim Al Salmi, Chief Executive Officer of MSX, said the exchange plans to work with the Financial Services Authority during 2027 on establishing an independent central counterparty, or CCP, which would stand between counterparties in securities transactions and strengthen the management of settlement risk.“2027 will be the establishment phase,” Al Salmi told journalists, adding that 2028 would be the target, in the best-case scenario, for introducing derivatives products.
The timetable gives greater definition to MSX’s previously announced plans to develop central-counterparty clearing and more sophisticated market instruments as it seeks to deepen Oman’s capital market. Al Salmi said a CCP is an essential prerequisite for derivatives because of the higher counterparty risks associated with such products. The move forms part of a wider development programme that has accelerated after Oman was placed on FTSE Russell’s Watch List for possible reclassification from Frontier to Secondary Emerging Market status.MSX is also looking beyond its recent pipeline of large energy-related listings as it seeks greater sectoral diversity and a wider range of investment instruments. Al Salmi said further oil and energy listings would remain welcome, but the exchange is increasingly focusing on companies from other sectors, larger private businesses and new investment products. Family-owned businesses are among the targets.
Al Salmi said there was already interest from family companies, with enquiries and meetings taking place, although no companies were ready to be named.“There is interest, there are enquiries, there are discussions and meetings taking place,” he said, expressing hope that some of these discussions would become clearer in the coming period.
The shift is significant because recent large listings have helped increase the size and investable universe of the market, while the next stage of development will depend increasingly on attracting privately controlled companies and diversifying the sectors represented on the exchange. Al Salmi also pointed to stronger equity valuations as potentially improving the economics of an IPO for private owners. He said dividend yields, which several years ago had been around 8 per cent, had fallen to below 5 per cent as market valuations increased.
A lower dividend yield can result from higher share prices relative to dividends, although it is only one measure of equity valuation. Al Salmi said stronger valuations could allow family-company owners considering a listing to realise higher values for stakes sold to public investors. MSX is also continuing work on exchange-traded products and other investment vehicles as it attempts to move from mechanisms designed primarily to stimulate liquidity towards broader investment activity. The exchange has already introduced market-making and liquidity-support mechanisms, expanded foreign-investor access and developed links with regional markets.
The next phase will place greater emphasis on whether that infrastructure can support more sophisticated products and attract private companies and international institutional capital on a sustained basis.
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