New rules for UAE brokerages create new classification

The board of directors of the Securities and Commodities Authority, SCA, has approved a new regulation for brokers and amended two other regulations.

The decision was taken during a meeting, which was presided over by the Board Chairman of SCA and Minister of Economy, Sultan bin Saeed Al Mansoori and attended by Mohammed bin Ali bin Zayed Al Falasi, Deputy Board Chairman, Abdullah Salim Al Turifi, Chief Executive Officer, Mubarak Rashid Al Mansoori, Mohammed Ali Ahmed Al Dhahiri and Butti Khalifa bin Darwish Al Falasi.

Also present at the meeting were Maryam Al Suwaidi, Deputy CEO for Licensing Affairs, Supervision and Enforcement (Board Rapporteur) and Dr Obaid Al-Za’abi, Acting Deputy CEO for Legal Affairs and Issuance.

The 34-article regulation classifies brokerage firms into (1) those which engage in trading only while the clearance and settlement operations are conducted through clearance members and (2) those which engage in trading, clearance and settlement operations for their clients.

The most significant features of the new regulation include the new classification of brokerage firms, the relatively low capital requirement to beef up liquidity on the markets and increment in the value of bank guarantee to safeguard the rights of clients.

The new regulation also states that no company shall engage in brokerage activity unless after acquiring SCA license which must be renewed annually.

The company must also be registered in the SCA record book for brokers.

A number of financial market-related issues were discussed at the meeting, in addition to a new regulation for securities brokerage and proposed amendments on Regulation for Margin Trading issued by virtue of Resolution No (25/R) of 2008 and other proposed amendments on Regulation for Trading, Clearance, Settlements, Ownership Transfer and Securities Custody, issued by virtue of Resolution No (2) of 2001.

The board approved the new draft regulation for brokers which was prepared in coordination with the UAE markets and all other stakeholders and concerned bodies in the securities industry.

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