Interview: Khaldoun Al Tabtabaie

What guides KCC’s strategy, and what are the main challenges the entity has faced?

KHALDOUN AL TABTABAIE: The pillars of KCC’s strategy include the contribution to capital market development initiatives, alignment with international best practices, improvement to core services, and most importantly, investment in human capital. One of the challenging aspects we faced was how to translate plans into meaningful results, particularly when there are different stakeholders in a market that has seen little change to its infrastructure previously.

The other challenge was how to achieve rapid transformation within a short period in order to deliver market initiatives, and thus contribute to the upgrade of Kuwait’s capital markets. However, our continuous investment in people and technology, which we take seriously, has served us well in achieving the goals set within our strategy and those in the market’s strategy.

In what ways is technology helping KCC achieve its goals, and how can it improve the market?

AL TABTABAIE: KCC’s investment in technologies allowed it to become agile in terms of development, thereby enabling it to provide added-value services to the different stakeholders it serves. Technology has also helped the company undertake the different market requirements with confidence, thereby adapting to rapid change. Recently, it launched IPO Kuwait, a service that allows investors to complete an initial public offering (IPO) or capital increment subscription from order to payment through simplified e-channels, without the need to go to banks. The new service has already been utilised in two of the largest IPOs in the country, Boursa Kuwait and Shamal Azzour. We are now looking at blockchain and the ways in which we could utilise the technology to serve global investors. In doing so, KCC took part in the world’s first cross-border securities settlement between two central depositories using blockchain, which was announced earlier in 2019. The successful test allows the company to explore the possibility to offer new services and introduce operational efficiencies to the market.

How has KCC contributed to the development of local capital markets, and how is this increasing international investor appetite?

AL TABTABAIE: Back in 2016, KCC embarked upon a long-term strategy aiming to bring its operations and services in alignment with the International Organisation of Securities Commissions’ principles for financial market infrastructures standards, thereby supporting the Capital Markets Authority’s market development initiatives and contributing to the country’s goal to turn into a leading financial centre. Since then, it has significantly invested in its infrastructure and human capital to meet the goals set forth in its strategy and that of the State of Kuwait.

The development projects that KCC undertook required the implementation of various regulatory and operational enhancements in the Kuwaiti securities market infrastructure to bring it in line with international standards for capital markets, thus making it more accessible and attractive to global investors. This involved the redesign and implementation of the entire post-trade infrastructure as well as the introduction of related operations and rules, thereby easing access for foreign investors to Kuwait’s capital markets.

Various changes were introduced to the post-trade infrastructure over the past two years, including a T+3 settlement cycle, custodian rejection facilities for foreign investors, a risk waterfall model to deal with failed settlements and a simplified account opening process, among others. The successful completion and delivery of these projects resulted in the reclassification of Kuwait to emerging market status, thereby putting it on the global investors’ map. As a result, the number of new foreign investor accounts rose significantly, and in turn this contributed to increased trading volumes.