‎CMA obliges financial institutions not to accept fake subscription applications: Sources

‎CMA obliges financial institutions not to accept fake subscription applications: Sources

The Capital Market Authority (CMA) sent a circular to the financial institutions obligating the financial advisors and subscription record managers not to accept participation applications without verifying them, private sources told Argaam.

Applicants must be able to cover the application value either by cash or by making the necessary arrangements.

CMA obliged the financial advisors, upon the expiry of the book-building period, not to use the term “collected funds”, and to use instead “total volume of applications” in announcements to the public about offering coverage ratios, the sources added.

The step comes in light of the high levels of coverage of unrealistic subscriptions, as the CMA noticed some practices during its participation in book-building processes in the initial subscriptions and institutional offerings.

The CMA found out that some record managers of institutional subscriptions accept applications of a class of legal persons without taking into account their financial solvency.

The Authority stressed that it’s vitally importance for financial advisers and record managers to verify that the applications submitted to participate in book-building process are genuine and fully customizable, the sources added.

The CMA further stressed that all financial institutions must abide by the Capital Market Law and its executive regulations, noting that Article 49 of the Law