Jun. 8--While the argument over the economic stimulus package continues in the National Assembly, another piece of equally controversial and critical legislation is still being awaited by Kuwaiti traders. In the last few years, Kuwaiti traders repeatedly demonstrated in front of the bourse building against the manipulation of stock prices. They even demonstrated against the decisions of the administration of the KSE itself for not halting trading -- some cases went all the way to courts before they could find any r esolution.

These continued standoffs raised many voices that demanded the establishment of an independent, supervisory authority to resolve the conflicts inside the stock market, but the formation of this authority itself seems to cause another kind of conflict -- a legal one. The Kuwait Stock Exchange is the second largest market in the Arab world with a net value of more than KD 40 billion, and yet it remains the only market in the GCC without a capital market authority. A watchdog

A CMA is an independent body that supervises trading procedures, monitors transactions and detects conflict of interests. It can resolve conflicts between investors and companies, scrutinize profit reports given by listed corporations, guarantee transparency of information, regulate takeovers and merging operations and penalize illegal activities. In short, it's the capital market's policeman and detective that maintains a fraud-free market.

The current system lacks independence, and it's the main reason for the financial crisis we have in Kuwait right now," said Hajjaj Bukhadhour, a financial analyst at the KSE. "The Kuwaiti market doesn't have foreign investors, and it's not connected with international markets in a way that can cause all the damage that we've seen. The effects of the international financial crisis on the Kuwaiti market is only psychological.

There are more than 200 firms listed on the Kuwaiti bourse, which lost more than half its total value from June 2008 to April 2009. Trading in dozens of firms was halted at the beginning of the year after they failed to file annual reports. A CMA would enforce a stricter code of conduct and ensure that the value and books of listed firms met with international standards. Bukhadhour claims that currently around 40 percent of all trading operations at the KSE now does not match the worldwide recognized pract ices of trading, but the current system allows these kinds of activities to pass unseen, and therefore, unpunished.

Efforts to regulate the market started several years ago.