The Muscat Securities Market (MSM) was established by the Royal Decree (53/88) issued on 21 June 1988 to regulate and control the Omani securities market and to participate, effectively, with other organizations for setting up the infrastructure of the Sultanate's financial sector. After ten years of continuous growth there was a need for a better functioning of the Market. The MSM has been restructured by two Royal Decrees (80/98) and (82/98).
The Royal Decree (80/98) dated November 9th 1998 which promulgated the new Capital Market Law provides for the establishment of two separate entities, an exchange, Muscat Securities Market (MSM) where all listed securities shall be traded and the Capital Market Authority (CMA) - the regulatory. The Exchange is a governmental entity, financially and administratively independent from the regulatory but subject to its supervision. Thus the securities industry in Oman was well established to enhance investors' confidence by developing and improving all the processes appertaining to the stock market.
As a continuing process in the development of the securities market, the MSM has developed its regulations to provide information and financial data relating to the performance of the Market and all listed companies directly to investors through a highly advanced electronic trading system. This will not only ensure transparency of activities which is considered to be one of the main principles of a well organized market, but will support the market by encouraging investors to make the right investment decision at the right time.
The Market has developed its existing mechanism of clearance and settlement by introducing a new mechanism for the sake of encouraging stable dealing in securities as well as providing a better environment that might help the flow of foreign investment to the Sultanate.
The former settlement mechanism was involving only three parties in the clearance and settlement, MSM, Muscat Clearing and Depository Company (S.A.O.C) and the broker .The newly introduced settlement formula is through a Settlement Bank with a Settlement Guarantee Fund (SGF).
SGF has been established with the contribution of all intermediary companies operating in the Market. It aims to guarantee continuation of settlement processes among intermediaries. Where any of the intermediaries is unable to provide the settlement amount SGF would transfer the deficit to the settlement bank on behalf of the intermediary and then collect the same from the intermediary, thus the settlement would be smoothly completed