SCA developing legislative infrastructure for local financial markets
The Emirates Securities and Commodities Authority (SCA), which has achieved many of the objectives earmarked in its last year’s strategic plans, continuous to work hard towards achieving those targets for this year with the aim of improving its performance to the latest international practices on the global financial markets.
In doing so, the SCA continues to develop a number of rules and regulations to boost the legislative infrastructure of the UAE’s financial market sector, while, on the other hand, it continues to organize awareness and counseling campaigns to serve the interest of all stakeholders and concerned parties in that sector.
Commenting on the issue, H.E. Abdullah Al-Turifi, SCA Chief Executive Officer, attributed those SCA achievements to the continuous and unflinching support of H.E. Eng. Sultan bin Saeed Al-Mansoori, Economy Minister and SCA Board Chairman, as well as to the hard work and relentless efforts of the entire SCA board member.
He said the SCA was striving hard to further develop the legislative system of the UAE’s financial market and had input some necessary amendments into the rules and regulations to further strengthen the legislations to upraise them to the level of those of the international markets in the advanced countries of the world, adding that the SCA systems were being reviewed regularly to upraise them to meet the standards of the International Organisation of Securities Commission (IOSCO).
A report released by the SCA shows that the SCA board had held a series of meetings throughout the year, leading to achieving most of the targeted strategic objectives for the 2009/2010 regarding the development of legislative infrastructure, having issued a number of new regulations and amended others.
Legislations: Regarding the legislations issued in 2009, H.E. Eng. Sultan bin Saeed Al-Mansoori, Economy Minister and SCA Board Chairman, has issued Ministerial Decree No. 518 of 2009 on rules and regulations of Corporate Governance and Institutional Code of Conduct, which will be compulsory from May 1, 2010. The Minister also issued other decrees, including a decree regulating the “Custodian” Stock Exchange which allows the regulating of new activities needed on stock markets in the country, based on the best practices on international markets, and another decree regulating the work of record-keepers of public joint stock companies.
Other decrees include Resolution 30/R of 2009 amending the brokers’ by-law, including Article 1 and 17 of the by-law which allow a brokerage company to trade in its name and for itself. The amendments include rules and regulations governing the practice of a brokerage company trading in securities in its name and for itself, which must done after getting approval from the SCA and in accordance with the rules indicated by the resolution. The rules demand from such a company to invest 40% of the net investments of its shareholders in its custody in such a venture and that its investment in one particular stock must not be more than 10%of the total amount earmarked for investment for itself.
The amendment is also seeking to achieve the interest of the market by laying down regulations for these transactions, which must be through a company licensed to practice the “Custodian” activities and to maintain the necessary capital adequacy that would allow the company to conduct its activities and give orders on its transactions through the person tasked with managing the investment account and the interest of the broker’s clients in protecting their transactions, giving priority to their orders against the broker’s orders and averting a conflict of interest.
The SCA has also published on its website all its rules and regulations in both Arabic and English, having reviewed and modernized those rules to match up with the best international practices.
Supervision: In the area of supervision, the SCA has cancelled the license of two brokerage companies based on their request. They are NPF Securities and EMCO Financial Services. The licenses of two other companies, International Shares and Bonds Centre, InvestOne Financial Brokers, have been temporarily cancelled for a year, while the case of Golden Gate closed with a court judgment having been passed to liquidate the company.
203 violations The SCA has reviewed the report on monthly accounts of brokerage companies to identify those who have committed various forms of violations to penalize them in accordance with the directives of the SCA board. Following the review of the 2009 activities of those firms, the SCA recorded 113 violations of the supervisory and monitoring rules of trading, in addition to 14 violations of information disclosure rules ad 76 violations of financial information disclosure rules by public joint stock companies.
The SCA also reviewed 83 complaints by investors and companies and suspended 1 investor, three brokerage companies and brokers’ representative, as well as seven non-brokers’ representatives.
The SCA also cautioned 22 companies for flouting the SCA rules, fined eight others various sums of money.
On regulatory issues, the SCA has registered two companies which will soon be listed on the local stock markets. This brings to 135 the total number of public joint stock companies registered by the SCA, including 29 foreign firms.
The SCA has also supervised the merger of two brokerage firms. While the Emirates International Securities Company merged with the National Securities Company, the Symbol Securities Company also merged with National Financial Brokerage Company.
In a related development, the SCA also obtained the membership of two advisory committees of the Association of International Accountants and gained the membership of the Association of National Numbering Agencies (ANNA).
The SCA has also participated in a number of conferences, professional and academic meetings in a number of countries around the world. In coordination with the UAE cabinet, the SCA also participated in preparing a World Bank questionnaire. This helped pushed the UAE ranking in the competitiveness ranking to from 46 to 33. It has also prepared more than 100 studies on the best international practices in various subjects related to procedures, rules and regulations governing the work of companies and stock markets.
MoUs The SCA has also signed seven memoranda of understanding (MoUs) and two cooperation agreements in 2009. They all seek to boost joint cooperation, sharing of information and expertise and increasing the free flow of investment. The move is part of the SCA’s strategy of signing MoUs with its counterparts in various countries of the world to harmonize the rules and regulations of the SCA with those of its counterparts in other parts of the world.
The SCA has signed those agreements with the UAE Central Bank, the France Securities Commission, the Russian Federal Securities Commission, the Central Bank of Lebanon, the Palestinian Capital Market Authority and the Securities and Investment Institute of London, to just name a few.
SCA Training Centre – Dubai The SCA, in collaborating with a number of international bodies like the Securities and Investment Institute (SII), has started conducting exams for staff of brokerage companies and financial analysts. It has also completed reviewing 15 feasibility studies.
Recently, the SCA has inaugurated its training centre in Dubai as part of its plans to improve the performance of stock markets and its workers in a move aimed at boosting the national economy. In achieving its objective, the SCA is collaborating with a number of international bodies like the Securities and Investment Institute (SII), the CFA Institute, the Emirates Institute of Banking and Financial Studies (EIBFS) and other regional and international training institutes.
The SCA Training Centre, which started work by assessing 80 brokers operating in various stock markets in the country as part of an orientation program for the brokers had earlier received 200 applications from brokers submitting themselves to the orientation program and exams, which have now become a prerequisite for practicing the profession in the country.
The SCA has also received the third batch of trainees of its Emiratisation program, dubbed “Supporting Human Assets For Real Emiratisation” (SHARE).
The new batch of 12 trainees, mainly graduates of universities and other institutions of higher learning in the country and one from the Dubai Multi Commodities Centre (DMCC), will undergo the SHARE program which aims at training UAE nationals to work competently in the country’s stock market sector.
The 12 trainees were approved for the program after they had passed a special assessment examination, conducted in the presence of all the SCA deputy executive chairmen.
The SCA has also organized last year 26 training workshops in the area of strategy and orientation of its staff and other participants from other institutions. The program includes four training workshops in leadership skills for members of the SCA executive segment and seven training workshops for other segments. They all underwent an average of 283 hours of training.
The SCA has also appointed 37 new employees, including 27 UAE nationals, reflecting 72% of Emiratization rate of its staff.
In the area of Information Technology, the SCA started operating a special program, dubbed “The Help Desk System”, improved the operating system of all its staff from the Windows XP, Vista systems to Windows 7 system. It’s worth noting here that the SCA has been awarded the Microsoft Certificate for being the first federal government body to implement this initiative.
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