Kuwait's National Assembly approved on Wednesday (April 8) the proposed amendments on the Capital Market Authority (CMA) law.

The Capital Markets Authority (CMA) was formally launched in March 2011, more than 30 years after the Kuwait Stock Exchange was established.

It is meant to provide a steadying hand for the Gulf's third largest stock market in terms of capitalization, after Saudi Arabia and Qatar.

But instead, it has been beset with problems caused by strict restrictions on traders, and in recent months, it has been clamping down on what it sees as unusual market activity.

To help regulate the CMA, members of parliament approved the revised draft law which now expects to increase transparency in stock market, impose sanctions on bogus trades and help attract new investors.

Speaking after the parliament session, Chairman of the CMA, Nayef Al-Hajraf, said he hopes the new law will help improve the regulatory.

"We wish that these amendments, which we were keen to make them meet international and regional measures, will help regulate the market and impose clear punishments on those who do not commit to them," said Al-Hajraf.

While Kuwait's trading has long been dogged by traders' claims that big shareholders can manipulate prices, Chairman of the finance committee in the National Assembly, Faisal Al-Shaya, explained how the new law helps monitor this.

"We maintained the power and strength of the law and the market exchange. We maintained its transparency and publicity. We also insured the rights of young investors by not allowing manipulators to control them, and this is a very important thing. The amendment also supports our local market by making it meet international standard, which in return, helps attract foreign investors in Kuwait," said Al-Shaya.

Under article 122 of the Capital Markets Authority Law, bogus traders face an imprisonment for up to five years and a fine of up to 100 thousand Kuwait dinars (331,825.93 USD).

The article aims to achieve transparency in trading and protect the interests of small investors.

"One of the main goals of these amendments is to develop the stock market and create suitable investment environment that attracts investments to our local market," said acting minister of commerce and industry, Anas Al-Saleh.

One member of parliament, Yousef Zalzalah, said the new law allows the assembly to exercise new measures to boost investment opportunities.

"We did not only amend laws that can now impose sanctions, we also amended articles that gives the assembly a new set of rules through which it can flourish the market."

With the creation of the CMA, Kuwaiti financial institutions anticipated major reform to level the playing field and help attract new investors.

Regulatory changes have included limits on ownership of stocks to discourage manipulation, and protections for minority shareholder rights when large stakes in companies are acquired.