Yield on Idle Client Cash and a Bounded Margin Facility: A Broker’s Roadmap to CMA Resolution 85/2026

On 5 July 2026 the Official Gazette (Kuwait Al-Youm, Issue 1798) published Capital Markets Authority Board of Commissioners Resolution No. 85 of 2026 on “Additional Financial Services,” signed by the Chairman of the Board of Commissioners, Emad Ahmed Tayfoun, on 25 June 2026. In a single instrument the CMA rewrote four parts of the Executive Regulations of Law No. 7 of 2010 — Annex 4 of Book Two (service fees), Book Seven (Client Money and Assets), Book Eight (Business Conduct) and Book Eleven (Dealing in Securities) — to let licensed brokers open two new revenue lines and to place margin trading on a detailed prudential footing.

Why this matters

For the first time, a Kuwaiti broker may put a client’s uninvested trading balance to work, earning interest or profit at a local bank and sharing the return, and may extend leverage to investors through a clearly bounded margin facility. Both are commercial opportunities, and both import bank-like duties: segregation, disclosure, suitability, credit assessment and continuous regulatory reporting. The firms that benefit will be those that treat Resolution 85/2026 as an operating-model change, not merely a documentation refresh.

1. Yield on idle client cash (Book Seven, new Article 1-2-2)

Client money allocated for trading has traditionally been held segregated and idle. The resolution now permits a licensed person to deposit that cash into interest- or profit-bearing accounts at locally licensed banks and to charge a fee for the service—subject to a demanding checklist. The firm must obtain the client’s explicit, prior consent to the fee, with clear disclosure of the nature of the returns, the risks and the participation mechanism, and must allow the client to withdraw that consent at any time. Deposits are confined to locally licensed banks or entities under CMA oversight. Client money must remain fully segregated from the firm’s own money (consistent with Article 1-3 of Book Seven), held in dedicated separate or pooled accounts with accurate, per-client records open to audit. Critically, the firm must keep enough liquidity to return client funds immediately and must not impair the client’s ability to trade or settle—so the yield strategy cannot become a maturity mismatch. A periodic statement of the return earned is mandatory.

2. The inducements ban (Book Eight, new Article 6-1)

Alongside the new revenue line, the CMA has tightened conduct. A licensed person conducting a securities activity—and its employees—may neither pay nor receive fees, commissions or cash and non-cash advantages to or from clients. Three carve-outs survive: symbolic gifts that do not incentivise preferential treatment; genuine, cost-reflective charges such as custody, settlement and clearing that do not conflict with the firm’s duties of integrity and professionalism; and brokerage discounts granted under specific CMA instructions and the firm’s own written policy. In practice this closes the door on soft-commission arrangements and referral perks, and it should prompt a review of marketing incentives and any staff remuneration tied to client acquisition.

3. A prudential margin-trading regime (Book Eleven)

The centre of the resolution is a hard-edged margin framework. Before opening a margin account, the provider must assess the client’s solvency and creditworthiness through the credit information network (Ci-Net), confirm the client can bear the risk, and verify at least one year of securities-trading experience (professional clients excepted) and the absence of any CMA disciplinary finding in the previous two financial years; margin authority cannot be delegated to a third party. The client pledges the account’s securities, cash and any additional collateral to the provider and—on default—the provider may liquidate the pledged securities without being bound by Articles 231 to 233 of the Commercial Law or Book Three of the Civil and Commercial Procedure Law, a significant self-help remedy.

The quantitative limits are explicit and must be observed continuously: an initial margin of at least 50% of the market value of the financed securities; a maintenance margin of at least 25% at any time after the trade; financing to any single security capped at 25%, and to any single client at 10%, of the funds allocated to the service; equal treatment of all clients when setting margins; and compliance with the Book Seventeen capital-adequacy rules. Providers must file weekly reports with the CMA on these ratios and weekly reports with the Central Bank of Kuwait on the volume of client credit—an express bridge between the capital-markets and banking regulators. Providers may also publish and revise a list of margin-eligible securities, chosen for liquidity and issuer soundness, and may set their own tighter financing caps by risk.

4. Sequencing and a fee recalibration

Timing is split. The Book Eleven margin-trading amendments took effect on issuance (25 June 2026), so the leverage rules are already live. The remaining amendments—the Book Seven cash-yield service, the Book Eight inducements ban and the Book Two fee-schedule changes—apply from the date the CMA issues its new commissions-and-fees structure. That schedule also lifts the annual fee tied to the securities-exchange licence from 3% to 6% of aggregate market trading commissions.

WEFAQ advises

Treat this as a phased implementation. Because the margin rules are already in force, any live or planned margin offering should be mapped today against the 50%/25% margin floors and the 25%/10% concentration caps, with the Ci-Net, pledge and weekly CMA/CBK reporting workflows stood up without delay. For the cash-yield service, prepare the client-consent and disclosure documentation, the segregation and liquidity controls and the periodic-statement mechanics now, so the product can launch the moment the new fee structure is gazetted. In parallel, audit existing client agreements, marketing incentives and staff remuneration against the Book Eight inducements ban. WEFAQ’s Capital Markets & Finance team can benchmark current arrangements against Resolution 85/2026 and prepare the documentation each new service requires.

Source: Kuwait Al-Youm, Issue 1798, pages أ40–أ46, dated 5 July 2026 (Resolution No. 85 of 2026 signed 25 June 2026).

This article is provided for general information only and does not constitute legal advice. For advice specific to your circumstances, please contact WEFAQ Law Firm.