Esca given financial licensing powers

Sultan bin Saeed Al Mansouri.

The board of the Emirates Securities and Commodities Authority (ESCA) now has the jurisdiction to grant licenses to financial companies, consultancies and analysts to operate in the UAE.

In the decision issued by Esca, the board can grant licenses to those of the above who are already licensed by a similar authority in their home country.

Henceforth, financial entities can only operate inside the UAE after obtaining this permit from Esca.

Esca also stressed that licensed companies and their staffers should refrain from activities that would harm the market or those dealing with it. Companies are also banned, when exporting, offering or issuing financial consultancy related to a certain security or commodity, from offering a customer advice that conflicts with, or contradicts the consultancy given.

The company would be given a chance to explain the reasons behind the contradiction, however.

Also financial consultancy should not involve any information or data which is incorrect or misleading.

Companies are also banned from buying or selling a security or commodity involved in the consultancy offered by the company concerned, whether under its own account or that of any of its staffers, one week before or after issuing the financial consultancy.

The Esca decision said financial analysts should immediately tell the authority in case they, their spouses or children are related to the company issuing the security to be financially analysed or have anything in return. Esca expected the decision to take four months from the date of publishing in the official gazette to be implemented. Esca board, under the chairmanship of Minister of Economy and Board Chairman Sultan Saeed Al Mansouri, recommended that licences will be gradually issued in accordance with needs of the market.

Esca Chief Executive Abdullah Al Turaifi said the authority took into account a large percentage of remarks coming from the people concerned in line with principles approved by specialised world organisations while taking into consideration the nature and circumstances of UAE markets and their laws. Al Turaifi earlier disclosed that Esca was setting regulations organising the assessment of shares and companies in cooperation with one of the largest expertise houses. Meanwhile, board member Hamed Kadhim said the decision supports the legislative infrastructure of the country's financial markets.

The decision ensures a healthy environment to issue highly credible and transparent studies especially after the increase in the number of reports that involve discrepancies in reports assessing the value of one certain share, a thing which necessitated a mechanism to organise and control such reports, said Kadhim.

A second member of the board, Mahmoud Al Mahmoud, said the Esca decision aims to maintain the credibility of assessments and analytical studies of companies and shares in a way as to let investors know the real value of shares to be able to make decisions to sell or buy.

 

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