Other BriefingsOman Establishes Financial Services Authority: Key Highlights and Implications
Oman is establishing the Financial Services Authority (FSA), which will replace the Capital Market Authority, in a noteworthy restructuring of Oman’s regulatory frameworks.
By Giulia Interesse
On March 25, 2024, Oman introduced the Financial Services Authority (FSA) through Royal Decree 20/2024 (hereinafter, the “FSA Law”). The FSA, headquartered in the Governorate of Muscat, effectively supersedes the Capital Market Authority (CMA) in its regulatory role.
In this article, we outline the key changes and the impact of the FSA on Oman’s financial regulatory system.
Establishment and framework of FSA
The FSA, as stipulated in Article 1 of the FSA Law, is vested with legal, financial, and administrative independence, setting the stage for robust oversight in the Sultanate’s financial markets.
Article 2 delineates the logistical framework of the FSA, designating its headquarters in Muscat while empowering it to establish branches across various governorates. Such decentralization ensures accessibility and responsiveness in regulatory functions, fostering a conducive environment for market participants.
What has changed with the establishment of the Oman Financial Services Authority?
Transfer of responsibilities and assets
Under Article 3 of the FSA Law, all duties and assets previously under the purview of the CMA have been transferred to the FSA. This encompasses allocations, assets, rights, obligations, and holdings.
Additionally, Article 7 mandates the replacement of all references to the “Capital Market Authority” in existing laws and royal decrees with “Financial Services Authority”.
Meanwhile, Article 8 underscores the decree’s efficacy by nullifying conflicting provisions, ensuring regulatory coherence and consistency across the financial landscape.
Expansion of regulatory competence
A notable shift involves the transfer of regulatory oversight of the accounting and auditing profession from the Ministry of Commerce, Industry, and Investment Promotion to the FSA. Consequently, the FSA’s Board of Directors will establish the requisite committee as specified by relevant laws.
The FSA is positioned to assume a pivotal role in regulating these professional domains, as indicated by the replacement of references to the Ministry in relevant laws with the phrase “Financial Services Authority”.
Awaited implementing regulations
While the FSA Law has been enacted, implementing regulations delineating the FSA’s roles, responsibilities, and operational guidelines are pending publication. Until these regulations are formalized, the existing legal framework, regulations, and decisions will remain in effect, provided they do not contravene the provisions of the FSA Law.
The responsibility lies with the Chairman of the FSA’s Board of Directors to issue the necessary regulations and decisions to effectively implement the FSA Law.
Who is affected?
It’s crucial for all parties previously involved with the CMA or transactions overseen by the CMA to acknowledge this substantial transition. This shift also impacts accounting and auditing practitioners and companies, who will now interact with the FSA instead of the Ministry of Commerce, Industry, and Investment Promotion.
What is the anticipated impact of the FSA
The transition to the FSA signals a profound transformation in Oman’s financial regulatory framework, extending its purview beyond capital markets. As the FSA steps into its expanded role, stakeholders engaged in transactions involving Omani entities formerly under the purview of the CMA should remain vigilant, anticipating potential impacts on their operations.
One example of this is the incorporation of diverse financing products such as green and sustainable bonds, sukuk, and Waqf sukuk, announced by the FSA on April 1, 2024. These regulations offer specialized categories of bonds and sukuk designed to address the financing requirements of investors and issuers.
All in all, through public consultation and stakeholder engagement, the FSA has ensured that these regulations reflect industry needs and foster a dynamic financial ecosystem. As Oman moves towards a robust and inclusive capital market, the issuance of bond and sukuk regulations by the FSA sets a strong foundation for sustainable growth and development, positioning Oman as a progressive player in the global financial arena.
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