New rules and regulations designed to boost the legislative infrastructure of the UAE's financial markets are being developed by the Emirates Securities and Commodities Authority (SCA), CEO Abdullah Al Turifi has revealed.
And the authority is continuing to organise awareness and counselling campaigns to serve the interest of all stakeholders and concerned parties in the sector.
The overall aim is to raise the SCA's performance level to the standard of the international financial markets.
"The authority is striving hard to further develop the legislative system of the UAE's financial markets and has made some necessary amendments to the rules and regulations to further strengthen the legislations and raise them to the level of the international markets in the advanced countries of the world," he said.
"The SCA's systems are being reviewed regularly to raise them to meet the standards set by the International Organisation of Securities Commission."
Al Turifi was optimistic about the outlook for 2010, saying: "In the last year we went through the worst financial crisis the world has seen. But our financial markets managed to get through it and they are in a good situation compared to the global financial markets."
An SCA report on the past year says the board held a series of meetings which led to the achievement of most of the strategic objectives for 2009-2010 regarding the development of the legislative infrastructure. A number of new regulations were issued and some existing rules were amended.
Economy Minister Sultan bin Saeed Al Mansouri, the board's Chairman, issued Ministerial Decree No518 of 2009 on rules and regulations of corporate governance and institutional code of conduct, which will come into force on May 1.
Another ministerial decree regulates new activities in the country's stock markets, based on international best practice, while a third regulates the work of those who keep the records of public joint stock companies.
Other decrees include Resolution 30/R of 2009 amending the brokers' bylaw, including Article 1 and 17 which allow a brokerage company to trade in its name and for itself. The amendments include one covering the rules and regulations governing the activities of a brokerage company trading in securities in its name and for itself, which requires approval from the SCA and must be conducted in accordance with the rules set out in the resolution.
The SCA has published all its rules and regulations in both Arabic and English on its website, having reviewed and modernised the rules to match up with best international practice.
In the area of supervision, the SCA has cancelled the licences of two brokerage companies – NPF Securities and EMCO Financial Services – at their request. The licenses of two other companies, International Shares and Bonds Centre and InvestOne Financial Brokers, have been temporarily cancelled for a year, while the case of Golden Gate ended with a court judgment being passed to liquidate the company.
The SCA has reviewed a report on the monthly accounts of brokerage companies to identify those that have committed various forms of violations so it can penalise 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 and 76 violations of financial information disclosure rules by public joint stock companies.
The SCA also reviewed 83 complaints by investors and companies and as a result suspended eleven investors, three brokerage companies and brokers' representatives and seven others. The authority also cautioned 22 companies for flouting the SCA rules and fined eight others.
On regulatory issues, the SCA has registered two companies that 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 also supervised the merger of two brokerage firms – the Emirates International Securities Company merged with the National Securities Company and the Symbol Securities Company merged with the National Financial Brokerage Company.
In a related development, the SCA became a member of the Association of National Numbering Agencies and two advisory committees of the Association of International Accountants.
The SCA has participated in a number of conferences, professional and academic meetings in a number of countries around the world. Working with the UAE cabinet, the SCA also participated in the preparation of a World Bank questionnaire.
This helped to push the UAE's ranking in the competitiveness list up from 46 to 33. The authority has prepared more than 100 studies on best international practices in various subjects related to procedures, rules and regulations governing the work of companies and stock markets.
The SCA signed seven memorandums of understanding and two co-operation agreements in 2009. They all seek to boost co-operation, the sharing of information and expertise and increase the free flow of investment. The move is part of the SCA's strategy of signing MoUs with its counterparts in various countries to harmonise its rules and regulations with those of its counterparts in other parts of the world.
The SCA has signed 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.
And the authority, in cooperation with a number of international bodies such as the Securities and Investment Institute (SII), has started conducting exams for the staff of brokerage companies and financial analysts. It has also reviewed 15 feasibility studies.
The SCA has inaugurated its training centre in Dubai as part of plans to improve the performance of stock markets and its workers in a move aimed at boosting the national economy.
In working towards achieving its objectives, the SCA is working with a number of bodies like the SII, the CFA Institute, the Emirates Institute of Banking and Financial Studies (EIBFS) and other regional and international training institutes.
The authority last year organised 26 training workshops in the area of strategy and orientation for its staff and participants from other institutions. The programme includes four training workshops in leadership skills for members of the SCA executive segment and seven training workshops for other segments. They all received an average of 283 hours of training.
Financial experts told Emirates Business that the SCA had made real and noticeable achievements over the past year – but said it still needed to boost its performance further.
Hamood Al Yasi, General Manager of Emirates International Securities, said SCA should concentrate on modernising legislation because many laws had not been updated for a long time.
"Our financial market knows only one product, which is the purchase and sale of shares," he added. "There are many other products in the world today and a lot of them should be available here, and there should be mechanisms to protect investors from speculators."
Ziyad Al Dabbas, a financial consultant at National Bank of Abu Dhabi, said: "The SCA's positives last year were obvious. The problem does not lie with the SCA but with the many companies that do not obey its laws – especially the laws relating to disclosure and transparency."
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