Enforcement in financial regulation: an analysis of mechanisms in Kuwait and the UK

Lulwa M. Al Ben Ali
A PhD student at Warwick School of Law – University of Warwick – UK


Effective supervision and enforcement are important factors for well-established financial markets. Supervision seeks to deter noncompliance while enforcement seeks to detect and punish noncompliance. This study aims at identifying the most appropriate and effective approaches in regulating securities in relation to supervision and enforcement powers of the Kuwait Capital Markets (CMA). The study employs library resources to analyse laws and regulations governing the financial markets in the UK and Kuwait. This research analysis the UK regulation to reveal the deficiencies and shortcoming in active oversight in the UK.
However, three conclusions can be drawn. First, the CMA use risk-based approach which tend to assess current risks and do not have proactive intervention approach in identifying and responding to risk at an early stage. The risk-based approach failed to protect the financial markets from the 2008 financial crisis. Second, there are five core tasks for enforcement of financial markets regulation namely; detecting, responding, enforcing, assessing, and modifying. Each task must be well-organised to have effective enforcement.
Finally, the CMA tend to focus only on deterrence approach in exclusion of compliance mechanism. A combination of compliance and deterrence approaches is the best practice to ensure effective law enforcement. Overall, the CMA needs to improve detection techniques, enforcement tools, performance assessment procedures, precautionary procedures and modification capacities.
Key words: Financial markets, financial regulator, capital market authority, financial crises, tcansparecy.

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