Regulatory Alerts2010-03-16
Regulations on Managing Third-Party Portfolios at Islamic Banks
The Central Bank of Kuwait issued revised instructions transferring the supervision of local securities portfolios managed by banks and investment companies to the Kuwait Stock Exchange, while retaining direct oversight of foreign securities. The regulations mandate strict segregation of customer funds, independent accounting records, professional management teams, and standardized agreements that prohibit using portfolios as collateral or for third-party financing without prior consent. Effective November 9, 2005, these directives require all managing parties to align existing portfolio arrangements with the new compliance standards and reporting obligations.
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