Thursday, May 23, 2024

Financial Leap in Oman: FSA Unveils New Bond and Sukuk Regulation


FSA Issues Bond and Sukuk Regulation in Oman

The financial landscape in Oman has taken a significant step forward with the recent announcement by the Financial Services Authority (FSA). Under the leadership of Sultan Salim al Habsi, the FSA has unveiled a new regulation dedicated to the oversight and promotion of bonds and sukuk within the Sultanate. This development is set to enrich the long-term debt market, offering expansive financing opportunities for the private sector’s growth and innovative investment ventures.

Emphasizing flexibility and innovation, the new regulation introduces a range of diversified financing products, including Green and Sustainable Bonds and Sukuk as well as Waqf Sukuk. This approach not only accommodates the varied financing needs of investors and issuers but also integrates special provisions for the issuance of environmentally and socially responsible financial instruments.

A significant feature of this regulation is the inclusion of comprehensive disclosure rules, particularly concerning green and sustainable bonds and sukuk. Issuers are now mandated to adhere strictly to these disclosure standards, a move aimed at bolstering the capital market’s integrity while simultaneously attracting conventional investors and those with a keen interest in sustainability.

Sheikh Abdullah Salim Al Salmi, the Executive President of the FSA, elaborates on the regulation’s pivotal role. It stems from an ambition to augment the legislative framework of Oman’s capital market, thereby aligning with global standards and practices. Al Salmi views the regulation as a cornerstone in sculpting a conducive investment atmosphere and diversifying the instrument portfolio accessible to investors, both local and international. This initiative is fundamentally aligned with Oman Vision 2040’s strategic objectives, spotlighting resilient financial instruments and legislations that promote the sustainable management of resources.

Al Salmi further explains that the regulation is primed to champion innovative financing solutions tailored to the specific requirements of various projects. Apart from traditional bonds and sukuk, the regulation sets the stage for the issuance of sustainable and green bonds and sukuk. This is particularly pertinent as Oman endeavours to achieve net-zero carbon emissions by 2050, underscoring the pivotal role of green finance in economic development. Moreover, the introduction of Waqf Sukuk aims to rejuvenate the Waqf sector, facilitating the engagement of a broader audience in the economic tapestry through assets benefiting educational, medical, and social initiatives.

In preparation for its release, the FSA engaged in a comprehensive consultation process, incorporating feedback from a wide array of stakeholders including public joint stock companies, audit firms, law firms, and relevant governmental bodies. This collaborative approach ensured the regulation was crafted with a well-rounded perspective, addressing the needs and concerns of all participants.

The regulation’s structure is meticulously designed, comprising 12 chapters that cover various aspects of bond and sukuk issuance. These include private placement, rights issues, special purpose companies, financial trusts, Sharia compliance, and the intricacies of managing beneficiary or issuer agents. A notable inclusion is the detailed provisions for green and sustainable bonds and sukuk, reflecting Oman’s commitment to sustainable finance.

In a move to enhance versatility, the regulation allows for bonds and sukuk to be issued in any convertible currency and permits prospectuses for private placements to be drafted in English. This adaptability signifies Oman’s readiness to engage more deeply with global markets, paving the way for a more dynamic and sustainable economic future.

Oman’s introduction of the Bonds and Sukuk Regulation represents a significant stride towards achieving the strategic objectives outlined in Oman Vision 2040. By facilitating the growth of a resilient, innovative, and sustainable financial sector, the Sultanate sets itself on a promising path towards comprehensive economic development and wealth creation.

Alexandra Bennett
Alexandra Bennett
Alexandra Bennett is a seasoned business journalist with over a decade of experience covering the global economy, finance, and corporate strategies. With a Bachelor's degree in Economics and a Master's in Business Journalism from Columbia University, Alexandra has built a reputation for her insightful analysis and ability to break down complex economic trends into understandable narratives. Prior to joining our team, she worked for major financial publications in New York and London. Alexandra specializes in mergers and acquisitions, market trends, and economic

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