Market Profiles

FII Market Entry Requirements for Oman

RBC IS operates a segregated account structure in this market.

Please refer to 'Market Account Opening Requirements' for information on the market requirements. Clients are requested to refer to the requirements for information purposes only.

For further information or support around accessing this market, please contact your RBC IS representative.

Muscat Securities Market (MSM)
MSM was established in 1988, trading began in May 1989. Trading was originally carried out by open outcry until 1999 when the electronic trading system was implemented in 2003. The MSM is subdivided into the Regular, Parallel, Third and Bond markets. New companies are first listed on the Parallel market. After a period of three years, subject to fulfilling certain requirements, they are transferred to the Regular market, although there are no differences between the Regular and Parallel markets in either the mode of trading or in the settlement of trades. If a company has qualified for movement to a higher market or failed to comply with the conditions of retaining it in its listed market, MSM take the necessary steps and act accordingly. The MSM reviews the scrips annually to determine the eligibility of the company to a particular market.

Conducted electronically, the exchange currently uses the ATOS Euronext electronic trading system. The system is order driven, with brokers feeding in bids and offers. The system has the capability to auto-match the orders and execute the trade.

* Note: trading hours may be amended during the holy month of Ramadan.

Capital Market Authority (CMA): a self-regulatory organisation that oversees securities activity. The CMA is a governmental authority which monitors, regulates and takes corrective action as necessary in relation to the market. The CMA has issued several administrative decisions and regulations aimed at improving transparency and boosting investor confidence. These include regulations for licensed companies, capital adequacy requirements and disclosure requirements for listed companies.

All securities are dematerialised. Securities are held at the Muscat Clearing & Depository (MCD) in a book-keeping form.

Prices are normally allowed to fluctuate up to 10% of the last day's closing price. However, occasionally the share price of a company may be allowed to fluctuate by a higher percentage. This occurs when shares are traded for the first time after a bonus issue, a rights issue or a public offer. Furthermore, in some circumstances, the MSM allows prices of poorly traded stocks (e.g. stock traded in the Third Market) to fluctuate freely from the daily price band so that market participants can immediately realign the market price to reflect current market conditions and company prospects.

OMR

Not available

Subcustodian adheres to the market settlement environment for securities in Oman. Each securities investor in Oman must obtain a National Investor Number (NIN) where a depository custody account is maintained in the books of the Muscat Clearing and Depository (MCD) which is the CSD in Oman. Subcustodian maintains a securities account in our books to mirror the transactions and holdings in the NIN. Foreign Investors can trade in listed equities and bonds under the T+3 and T+2 settlement cycles respectively.

At the MCD, non-resident investor’s securities positions are held in a custody account that cannot be accessed by local brokers. When an investor executes a purchase trade, the securities are credited into the custody account and are thus protected from unauthorised access. The market does not have a separate registration process and the securities can be construed as physically possessed by the investor on the settlement date once the securities are credited. However for the purpose of corporate entitlement, ownership of the shares is calculated from the date of the purchase trade regardless of when this settles.

When a broker executes a purchase trade, the custodian is required to accept the trade to enable securities settlement.  The custodian ensures that its client’s instructions match the broker’s invoice before accepting the trade on settlement date.

When a broker executes a sale trade, on trade date, the selling broker enters the order to sell on the Muscat Securities Market (MSM). Upon trade execution, the broker forwards the trade invoice to the custodian who is required to accept the trade to enable securities settlement.  Subcustodian ensures that its client’s instructions match the broker’s invoice and receives the sales proceeds before accepting the trade on settlement date.

Acceptance of Trades

On the settlement date, the custodian is required to accept or reject trades executed in the depository account of the investors under its custody. This acceptance rejection mechanism is available on the MCD terminal. Since clearing membership has yet to be introduced in Oman, the custodian does not take up any cash obligations for the trades accepted. Acceptance of trades is limited to enabling the settlement of securities in the client’s depository account. The settlement of the cash component of the trade takes place between the MCD and the broker.

The acceptance / rejection of trades must take place latest by 11.30am on the Settlement date of the trade.

Purchase Trade – Subcustodian as a custodian accepts all purchase trades subject to matching of the client instructions with the counterparty allegements.

Sale Trades – Subcustodian accepts all sale trades subject to matching of the client instructions with the counterparty allegements. Considering the fact that Subcustodian is not a clearing member and the sales proceeds are first received by the local broker, Subcustodian ensures receipt of sales proceeds from the local broker prior to accept the trade to protect our clients’ interest.

Clearing of trades

Post the acceptance process at 12noon, all brokers receive their cash obligations and deliver the net cash payable position to the MCD’s account held with the Central Bank of Oman.

The MCD checks to see that brokers have met their cash obligation. The MCD also checks to see that the sellers have sufficient deliverable positions for their sale trades.

Where the two conditions are met, the MCD will transfer the sales proceeds to the selling brokers account for all cases where the sellers have sufficient deliverable securities. Where the brokers have met their net cash positions, the MCD will move the securities from the selling investor’s depository account and credit the same to the buying investor’s account.

This takes place between 1 – 2pm.

Settlement for bonds follows a similar flow but in a condensed T+2 settlement cycle.

Physical: None

N/A

Turnaround trades can be executed in the market provided the purchase takes place before the sale and both trades are executed by the same local broker. Settlement of both trades will be on a gross basis i.e. both the purchase and the same will need to be settled individually.

None. The Muscat Clearing and Depository is responsible for clearing in the Oman market.

Muscat Clearing & Depository (MCD) - provides custody for the records of shareholders in joint stock companies, investment funds, bondholders, bearers of any other securities issued by the said companies, and the government as well as public authorities listed with Muscat Securities Market. Also responsible for the deposit, registering and provision of custody for share and bond selling /buying contracts and the other securities.

BIS is an international organisation which fosters cooperation among central banks and other agencies in pursuit of monetary and financial stability. The Committee on Payments and Market Infrastructures (CPMI) uses three common structural approaches, or models, to categorise the links between delivery and payment in a securities settlement system.

While not currently applicable to this market the settlement practices at the market resembles BIS settlement 2 model which is 'Gross settlement of securities and net settlement of cash (between the buying and selling brokers).

N/A

N/A

Share holdings may be required to be disclosed by the beneficial owner, particularly when holdings reach or exceed prescribed disclosure limits. Investors must ensure that they comply in full by reporting such holdings to the appropriate organisations for this market, within the timeframe required. If you have any questions regarding this issue we encourage you to consult your legal counsel. 

Failure to comply with reporting requirements may lead to penalties and/or other sanctions. 

Foreign Holding Limits
Foreign investors are allowed to invest in up to 70% of the equity of Omani public joint-stock companies. However, certain companies may specify foreign holding limits in their Articles of Association; which are usually capped at 49%. Following an amendment to the Capital Market Law, foreign holding limits in the mutual funds are now set by the internal regulation of the mutual funds. Previously, foreign holdings in mutual funds were limited to 49%.
In November 2014, the Capital Market Law was further amended and the ownership limit of public joint stock companies has been changed.
MCD is responsible for monitoring the foreign ownership limits and will reverse a trade if these limits are exceeded. Once the instrument is live to the market, the CMA has clarified that it will be possible for foreign investors to own 100% of the units of a Real Estate Investment Trust (REIT), provided that at least 40% of the REITs capital is offered to the public.

Investment Restrictions
Oman's Capital Market Authority has provided a framework for investors looking to acquire a 25% or higher stake in a public joint-stock company listed on the Muscat Securities Market (MSM). All provisions and investor requirements are included in the Takeover and Acquisition Regulation. Furthermore, any person who intends to acquire more than 10% control in a bank or establishment that exercises banking business is required to obtain prior authorisation from the Central Bank of Oman.

Significant Shareholding Reporting Details
The CMA requires beneficial owners to disclose ownership when their shareholdings reach 10% of the issued shares. Disclosures must be made prior to settlement date, ideally on trade date. Beneficial owners must report to the Capital Market Authority by form or by letter detailing the objectives and reasons for such acquisition, along with the anticipated date to initiate the acquisition process, with full trade details.

Investment Amounts
No restrictions reported

Book-Entry: the market authorities review each late settlement on a case by case basis and will issue fines where appropriate. It should be noted that these reviews can take some time. Brokers are required to ensure that shares are available for sale prior to executing the order.

The market does not have a buy in process. If the broker fails to deliver the shares, the market authorities will force the defaulting broker to buy the securities immediately to cover the short position so that the securities can be delivered. The broker is not permitted to benefit from any change in the price; fined 1% of the value of the trade. Additional penalties of OMR 5 per contract (trade order) per contract per trade from Trade Date for each day the trade is not settled.

Local brokers are able to sell out securities purchased for clients where the clients have failed to pay for them by settlement date. The brokers do not need client authorisation for the sell-out but need to keep their clients informed before doing so.

Clients who purchase trades that fail settlement on the settlement date because of missing/mismatched instructions or insufficient funding run the risk of a sell-out by the local broker should they choose to apply this.

Physical: None

Not permitted

The Settlement Guarantee Fund is composed of three levels:

• Level 1 – A buffer of OMR 250,000 held in MCD’s account at CBO with immediate access.
• Level 2 – A collateralised credit line against fixed deposits of OMR 750,000 held with a commercial bank.
• Level 3 – Approximately OMR 2 million held in Fixed Depository Receipts with different banks that can be accessed same day.

According to MCD, fixed depository receipts can be considered cash equivalent instruments and the three levels provide funds with immediate access if required. Historically, given the low fails rate in the market, the only level of liquidity resources used so far is the buffer held in MCD’s account at CBO.
The fund must be reviewed on quarterly basis whilst MCD performs stress-testing of it on a daily basis under the principle that all participants default. The scope of the test is validated by the regulator and the model is reviewed on an annual basis.
The average size of the fund is approximately OMR 3 million whilst the average gross daily payment value settled during 2019 through MCD was OMR 2.90 million (USD 7.52 million). Based on cash payment efficiencies resulting from the netting process, a default of all market participants in a single day would be covered by the current size of the SGF.

Oman is not a member of the Financial Action Task Force on Money Laundering (FATF), and is not on FATF’s blacklist.Oman is a full member of the Co-operation Council for the Arab States of the Gulf (GCC).The Royal Decree No. 72/2004, promulgating the Executive Bylaws for the Money Laundering Law (an extension of the Money Laundering Law), advises that the following must be enforced for account opening:

a) Ascertain clients' identity and ensure to obtain all the necessary information and documents including:

1) For Omani natural person: Full name, current address, copy of passport/ID/driving licence.

2) For non-Omani natural person: Full name, current address, copy of passport in addition to the copy of the residency permit or labour card for expatriates.

3) For juristic personality: Copy of valid commercial registration certificate, authorised signatories, articles of association and constitutive contract.

4) For clubs, cooperative, charity, social and professional foundations: Official certificate issued by the ministry concerned including the authorised signatories.Companies are required to request their clients to update all their related information and data as needed.

b) Companies are to obtain information of the true identity of the people opening the accounts, or dealing on their behalf.

c) Companies are to refrain from opening anonymous accounts, or under alias or false names or secret number or to providing service to such accounts.

d) For dealing with the Muscat Securities Market, proper empowerment documents (power of attorney, duly notarised and consularised) are required for carrying out transactions on behalf of another. The central authorities for reporting suspicious activity are the General Directorate of Criminal Investigations of the Royal Oman Police and the Central Bank of Oman. The following laws and regulations cover KYC and AML in Oman:

• Central Bank of Oman (CBO) Circular BM 921 dated 11 November 2001 highlighting Customer Due Diligence requirements for Banks.
• CBO letter BDD/AMLS/CB/ME/2004/5984 dated 27 December 2004 – Royal Decree 72/2004 which is the Executive Regulation of Money Laundering.
  
  
• CBO Circular BM 1073 dated 8 July 2010 –Royal Decree 79/2010 which is the Law related to Combating Money Laundering and Terrorism Financing.

This is an FII market. Please contact your RBC Investor Services' Client Manager before making portfolio investments.

Foreign investors wishing to invest in the market will require that an account be opened at the Muscat Clearing and Depository (MCD) Company which will be used for trading and securities holdings. The MCD requires that the beneficial owner be identified along with a registration or identification number as applicable in the country of domicile. The MCD will accept apostilled Power of Attorneys (POA) for investors domiciled in countries who are contracting parties to the Hague Convention of 5 October 1961 abolishing the requirement of legalisation for Foreign Public documents. For all other countries, consularisation of the Power of Attorneys is still a requirement. Please refer to the below link for a list of contracting states to this Convention.

http://www.hcch.net/index

Please add CRS Forms as a documentation requirement for all investor types (individual, companies, funds, etc).

Foreign investment is limited to 70% of the equity of Omani joint stock companies. Companies may specify a higher or a lower limit of holdings permitted to foreign shareholders as defined in their Memorandum and Articles of Association . The range of foreign investment allowed by individual companies ranges between 0 - 100%, with 49% being the average amount. The information relating to each companies permissible foreign ownership limit is available on the website of the stock exchange.

Individual investor limits in a company
The CMA prescribes sector-wise individual ownership limits in a company as listed below:

• 10 per cent for companies in the financial sector
• 15 per cent for brokerage companies
• 25 per cent for companies in other sectors

MSX announced that full (100%) foreign ownership of listed companies is permitted in the market in March 2022. 

Pre-approval is required from the CMA to exceed the above individual limits for all companies. For banking companies, investors need the additional approval of the Central Bank of Oman to exceed the threshold of 10 per cent. Such approvals can be coordinated through the local brokers licensed by the CMA.

Please refer section “Disclosure Requirements”

There are no overdraft facilities for non-residents, repatriation is on a cleared funds basis.

None

Local electronic payment systems in the form of RTGS.

Overdrafts are not allowed to FIIs in Oman (not even intraday) by the Central Bank of Oman.

There is no fixed pay date in Oman. There is no specific announcement regarding the date on which dividend cheques are paid. Dividends and interest payments are credited on payment date – payment date is not normally fixed and takes up to three week from the record date. The payment is made by either wire transfer or by bank cheques, which usually clear with the same day value if received before 10:00 local time. Almost all dividends are now paid electronically.

Generally annual

Generally semi-annual

Varies according to the issue but usually over 360 or 365 days.

N/A

All entitlements are protected based on traded positions as on the Record Date. Trades executed on the Record Date are eligible for the corporate entitlement.

Foreign investors are allowed to appoint a proxy but a power of attorney (provided during account opening) is required to be sent with the proxy. The proxy voter must be present at the meeting.

Shares are blocked by local subcustodian at MCD to protect against unauthorised trading. There is no special blocking on account of the proxy voting process.

Annual general meetings are normally announced two weeks in advance in the local press.

Meeting results are provided to the Capital Market Authority and some are announced in the local press.

Available on request

Required. The Global custodian or their appointed proxy service should send the authenticated proxy instructions within the announced period to the local subcustodian who will complete the form for proxy. This is handed over to the appointed person along with a letter and a copy of the power of attorney which allows the proxy to be provided to the appointed person.

N/A

In January 2023, a Royal Order has been issued announcing a permanent suspension on the application of withholding tax on dividend and interest income.

(The Oman Government introduced a 10% withholding tax on dividend income received by non-resident investors in Omani securities with effect from February 27, 2017).

In January 2023, a Royal Order has been issued announcing a permanent suspension on the application of withholding tax on dividend and interest income.

(The Oman Government introduced a 10% withholding tax on interest income received by non-resident investors in Omani securities with effect from February 27, 2017).

Capital Gains, Dividends and Income on securities investments at MSM are not taxed

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Mauritius
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Pakistan
Russia
Seychelles
Singapore
South Africa
Slovakia
Switzerland
Thailand
Tunisia
United Kingdom
Yemen
Vietnam

None

MCD charges OMR 1.5 per transaction for trade acceptance, which is equivalent to approx. USD 3.9. 
DR conversion requests charged at 0.025% of the value of the securities (min OMR 10, max OMR 500)

Oman Holiday Calendar

• Muscat Securities Market msm.gov.om
• Ministry of Information https://omaninfo.om/english
• Muscat Clearing & Depository https://www.mcd.gov.om
• Capital Market Authority www.cma.gov.om