Raad Mahmoud Al-Tal

Jordan’s capital market is flexible, but it still faces many challenges that prevent it from reaching its full potential. As the main regulatory body, the Jordan Securities Commission (JSC) can play a key role in addressing these challenges.

The market suffers from low liquidity and trading volumes. Few investors are active, making it hard to buy or sell large amounts of shares without affecting prices. The market also lacks variety in financial products. Stocks and bonds dominate, while other options like derivatives, exchange-traded funds (ETFs), and Islamic sukuk are limited. This reduces investment opportunities and makes managing risks harder.

Ownership concentration is another issue. A small number of major shareholders control large portions of many companies, which lowers the number of shares available for public trading and reduces liquidity. The market also lacks depth, with only a few large, well-known companies, limiting choices for investors and the ability to handle large capital flows.

Foreign investors are still cautious. Despite progress, Jordan’s market struggles to attract large foreign investments due to perceived risks or lack of familiarity. Digital infrastructureis also slow to develop, limiting online trading and automated processes.

Many investors, especially individuals and small and medium-sized enterprises (SMEs), lack knowledge about investing, the risks involved, and the products available. Corporate governance and transparency also need improvement to build investor confidence.

The market also lacks strong venture capital for SMEs and startups. Many companies rely entirely on bank loans, which can be restrictive. Jordan faces strong competition from more developed regional markets like Saudi Arabia and the UAE.

To address these challenges, the Securities Commission can take several steps. First, it can increase market liquidity by introducing market-making activities and reviewing regulations to lower trading costs. Second, it can expand financial products by enabling new instruments like ETFs, derivatives, and more diverse bonds.

The Commission can also protect investors and increase transparency by enforcing rules on insider trading, requiring timely disclosures, and improving corporate governance standards. Improving digital infrastructure in cooperation with the Amman Stock Exchange and the Securities Depository Center, including full digital registration for investors, is another key step.

Educating investors is also important. The Commission can run campaigns to teach the public about investment benefits, risks, available products, and how to use digital platforms. Supporting startups through simplified listing rules and creating a market segment for SMEs can further enhance market participation.

Additional measures include encouraging private companies to go public through incentives, allowing banks to increase investments in securities, introducing legislation requiring public companies to invest a small portion of retained earnings in securities, and reducing trading fees and capital gains taxes under defined limits.

Jordan’s capital market stands at a crossroads. It has a strong regulatory system and a long history, but it needs bold reforms in liquidity, diversity, governance, and digital transformation. If the Securities Commission successfully implements these changes, the market can become more than just a trading platform, it can be a real driver of economic growth and attract both domestic and foreign investment.

Raad Mahmoud Al-Tal is head of Economics Department, The University of Jordan