A legislation to establish an independent regulator for Kuwait's stock market was today approved by parliament on Tuesday. The main aim would be to enhance transparency in the Arab World's second largest bourse.

The 165-article Capital Market Law was voted by 48 members, including cabinet ministers and there was only one lawmaker who voted against it.

Under the law, an independent five-member Capital Market Authority would be set up and it will liable to ensure complete transparency along with stopping insider trading and other forms of illegal trading and fraud.

A government-appointed administration has been running Kuwait Stock Exchange (KSE), which was found as the region's first bourse in the early 1970s. This administration is told be lacking the powers to ensure transparency by the MPs.

Apart from this, the law also looks for creating a special tribunal for the stock market, and stipulates hefty jail terms and fines for a series of illegal practices.

With a capitalization of around 102 billion dollars, the market lists more than 200 local and foreign companies.

It should be noted that the only Arab bourses in the Gulf to record losses in 2009 were KSE and the tiny Bahrain Stock Exchange, with Kuwait dropping 10 percent. In January, the market concluded almost flat.