SCA Honors its Former Board Chairpersons & Members on 10^th Anniversary

In his address, H.E. Engineer Sultan bin Saeed Al-Mansoori, Minister of Economy and SCA Board chairman said: " Perhaps the significance of our celebration lies in the fact that it is being held on the 10^th anniversary of the issuance of the Federal Decree which established the Emirates Securities and Commodities Authority in 2000, setting off transactions on official securities markets in the country. The anniversary is providing a valuable opportunity for the evaluation of the past years of the SCA and to issue detailed report on achievements made and projects completed to give everybody the opportunity to have a clear picture of this great economic entity."

"The issue of the day for this forum concerns the dynamic relation and the interrelated roles between two main components of the capital markets, namely the supervision bodies and the exchange markets. This issue is one of ongoing controversy in the financial sciences and research fields, because of its ambiguous meaning for specialists and confusion for market dealers and traders. We are here not to give the final judgment regarding this technical issue, as this judgment will be better given by experts and specialists, but to summarize the role played by the Securities and Commodities Authority in developing the capital market in the UAE," he stated.

He pointed out that since its inception, the Authority had spared no effort to set the necessary infrastructure for the commodities and securities markets in the UAE, regulating, developing, monitoring and supervising these markets via an integrated regulatory system that forms the main guarantee for investment of monies and savings in securities. He said the Authority had played an active role in enhancing investor confidence, providing opportunities for investment in securities within the framework of a fair system that guarantees trading integration and accuracy in securities, and enabling these markets to be one of the basic foundations of the UAE’s financial and economic stability as well as the center of local and foreign investors’ attention.

Continuing his statement, Al-Mansoori said the Authority had made great strides over the last ten years, having been able to enhance the regulatory and legislative structure by issuing about 30 laws and decrees which have significantly contributed to establishing sound transactions on the capital markets and maintained market stability, while focusing simultaneously on performing its supervisory role by continuously following up trading on capital markets and arranging periodic and surprise inspection visits to brokerage firms.

The minister noted that the Authority has also enhanced the market depth by encouraging family-owned companies to convert to public joint stock companies and by putting in place regulations that control initial public offerings, which helped increase the number of companies listed on the financial markets. The Authority has been striving to diversify the investment tools being traded on the market by adding  to stocks and bonds other tools like Islamic Sukuk, investment funds and exchange traded funds to be traded side-by-side, in addition to other options, derivatives and other tools available on the commodities contracts market, which is the first of its kind in the region.

"The Authority has been working to boost the attraction of investment on the securities and commodities markets by encouraging the principles of disclosure and transparency, and by developing the criteria of corporate governance and institutional discipline which has positively enhanced the investment environment in one of the country's most significant investment channels," he stated.

"Neither the supervisory bodies nor the capital markets in the UAE were isolated from the impacts of the recent global economic crisis. There was a semi-consensus among experts regarding the unavoidability of the negative impacts on the structure of the global financial system, mechanisms, products, services, legislations and stakeholders. The Authority was among the first to derive lessons from the crisis and its repercussions, thus developing its organization structure and working mechanisms and legislations to ideally cope with the nature of the local markets and overcome the new challenges given birth by the global crisis," he added.

The Minister noted that past experience had proven that the UAE markets are capable of addressing and overcoming various economic challenges. "This resilience cannot merely be attributed to the huge and diverse investment injected into local markets, nor to the national economy's surplus liquidity, or to the advanced legislative structure, the safety mechanisms and the investor-friendly policies, it is also due to other strong incentive elements which reflect positively on the safety of our markets. Perhaps most significantly among those elements is the frequent good results of the public joint stock companies and their repeated good profit declarations over the recent period," he cited. "These provide promising opportunities and represent a major factor of investment attraction, which serve as a great incentive and reflect positively on our local markets' safety reputation and great performance which levels up with the best international practices" he added.

Also addressing the gathering, H.E. Abdullah Al-Turifi, CEO of the SCA, said the 10^th anniversary carries many important messages which go beyond celebration and award giving, adding that the event provides opportunity to look back and deeply evaluate what had been achieved so far and to outline the most significant challenges the authority faced during this period, while taking into serious consideration the need to look deeply into the future to closely scrutinize the authority's future plans and initiatives to be implemented as part of the its operation and strategic plans aimed at achieving its ambitious objective, which is to take the authority to the level of advanced securities authorities of the world.

He said at primary market level, the SCA had taken legislative steps to move from the permanent evaluation and booking system in use in the past to float shares for subscription to a new booking mechanism, which is more advanced and more objective - the book building mechanism which matches with international standards and practices in use in the world's most advanced markets.

"Regarding the authority's role in promulgating regulations and other necessary legislations for the securities market, the SCA has issued more than 30 legislations. This is in addition to the Law which was issued in 2000 to establish the authority. The authority is also regularly reviewing its regulations and legislations, amending them to meet new developments on the market, to improve the performance of those markets, enhance disclosure and transparency levels on the markets and entrench the principles of good governance and institutional discipline standards in order to protect the rights of stakeholders," he stated.

Touching on the SCA's role as a supervisory body working to ensure accurate and safe transactions on securities and commodities markets, Al-Turifi said the authority adopted in this regard an integrated process which is based on combining direct supervision through regular and surprise visit by its inspection teams with remote supervision through electronic screens, using advanced electronic systems which monitor transaction activities, the volume of deals and tracking them up consistently. "The authority has been able to discover many malpractices and violations which were published outright," he said, adding that the authority continues to follow-up the rate of regular and non-regular disclosures by public joint stock companies, while noting down the level of commitment to the timeframe in this regard, in addition to following up obligations of the markets as per the licenses issued them.

"Reviewing the SCA's past years and the challenges it faced during that period lead us to the question of what the future plan is for the authority, the outlook of development contained by its future strategic plan. As a matter of fact, the  SCA – by leading the march of development on the local securities market – has adopted a distinguished strategy for the years ahead. Notable among them can be outlined at the following levels:  

Legislative Operations:

• Continuing the development of legislations which regulate activities on the markets
• Continuing the review of the current SCA Law by making the necessary amendment on it
• Following up the implementation of the criteria of corporate governance and institutional discipline by listed companies 
• Boosting institutional investment to create a balance and minimize fluctuation on the market, as well as to introduce new investment tools on the markets
• Supervisory operations and updating and developing the supervision regulations
• Developing the information systems of the regulatory sector
• Following up the risk management system of brokerage companies
• Developing risk indicators helps in intensifying and deepening of supervision level and disclosure stability

Services:

• Developing SCA services in accordance with the best practices
• Implementing orientation programs of brokerage companies' staff

Prior to the opening session, former chairpersons and members of SCA board were honored in appreciation of their distinguished and selfless services. Those awarded include:

First: former chairpersons of SCA board, including: H.E. Sheikh Fahim bin Sultan Al-Qasimi, the first board chairman whose tenure spanned from 2000 – 2004. He was then the minister of economy and commerce and H.E Shaikha Lubna bint Khalid Al-Qasimi, the current minister of foreign trade, who served as the chairperson of the SCA board from 2004 – 2008, while she was then the minister of economy and planning.

Second: Board members, including H.E. Sultan bin Nasser Al-Suwaidi, UAE Central Bank Governor, who is still a member of the current SCA board (He was awarded for being on the board since the SCA was founded 10 years ago), H.E. Hamad Al-Hurr Al-Suwaidi, Undersecretary at the Department of Finance – Abu Dhabi (He is the Deputy SCA board chairman and has been on the board throughout the ten years of the SCA's existence), H.E. Sheikh Tariq bin Faisal Al-Qasimi, H.E. Mohammed Obaid Faris Al-Mazrouei, Assistant Secretary General for Economic Affairs at the General Secretariat of the Gulf Cooperation Council, H.E. Mohammed Jasim Al-Muzakki, H.E. Saif Khalfan bin Sabt, H.E. Mohammed Ali Al-Abbar, H.E. Salim bin Mohammed Al-Dhahiri, H.E. Humaid Darwish Al-Kitbi and H.E. Saeed Obaid Al-Jarwan.

A documentary film about the 10 years of SCA's march was shown to showcase the SCA's achievements and the role it continues play in protecting the markets and improving their performance to make them more attractive to investors. The film also outlined the SCA's role and achievements at the local, regional and international levels.

The forum consisted of three sessions. The first session, which was held under the theme: "Securities Authorities: Challenges and Ambitions", had Dr. Fawzi Bahzad, An Advisor on Securities at the SCA, as the moderator, while speakers include Dr. Bassam Al-Saket, Executive Chairman of Jordan Securities Commission, who spoke on: "The role of Capital Markets Regulatory Authorities, Mechanisms & Challenges in light of the  aftermath of the global financial crisis.

Dr. Al-Saket said in his presentation that the global financial crisis failed to adversely affect his country due to "strict commitment to the disclosure law and strict implementation of stringent laws and rules."

"We were to have a safe banking system, a very little bad performance loans and small foreign institutional loans. Moreover, we firmly stood against dealing in toxic assets and most of our investors are from big and long term investors," he added.

Another speaker during the session was H.E. Maryam Al-Suwaidi, Deputy CEO for Legal Affairs, Issuance and Research at the SCA, who spoke on : "The efficiency of the primary & secondary securities markets in UAE". She outlined in her presentation the role of SCA in boosting efficiency of primary and secondary markets through the activation of corporate governance, accountability and review criteria to boost the markets' efficiency and take them to international level of the International organization of Securities Commissions.

Another speaker during the first session was Paul Koster, Chief Executive of Dubai Financial Services Authority, who spoke on: "the positive and negative effects of post great panic elevated regulatory scrutiny". He said the global financial crisis had led to the scrutinizing review of the feasibility of legislations and legislative structures in the financial services sector, adding that following the crisis, regulatory institutions like the International organization of Securities Commissions (IOSCO) and the Basel Committee on Banking Supervision conducted studies on proposed regulation changes in the general interest and called for concerted efforts to develop securities markets operations.

 The session was rounded up with a presentation on: "The expected role of capital markets regulatory authorities in maintaining effective corporate governance" by Dr. Nasser Saidi, Chief Economist at Dubai International Financial Centre and Executive Director of Hawkamah Institute for Corporate Governance,. He said majority of experts believe the problem of the global crisis lies in corporate governance as the failure came from the top management and board of directors levels and regulators, adding that lessons which must be derived by regulators from the gulf States from this crisis should include strict implementation of rules and regulations in three major areas, including disclosure, risk management and the practices of board of directors.

 During the second session, which had Dr. Bassam Al-Saket as the moderator, H.E. Dr. Rashed Al-Baloushi, Acting Director General of the Abu Dhabi Securities Exchange made a presentation on: "the integral securities markets' roles and functions in relation to regulatory authorities". He started with a brief introduction of the Abu Dhabi Securities Exchange (ADX), the role it plays as part of the economic vision of the Emirate of Abu Dhabi and the ADX 2030 strategic plan and within  the strategic plan of the United Arab Emirates, in general.

 He said the role of Abu Dhabi Securities Exchange (ADX), based on its vision and objectives, is to lead the way in the development of UAE's capital market, develop the legal environment in a way that would ensure credibility, transparency and disclosure, as well as to maintain high professional level, present new investment mechanisms and tools and provide guidance in cost management without compromising competence in performance.

 The second speaker of the session, Paul Maco, a partner of Vinson and Elkins, made a presentation on: "Meeting the dual challenge of securing domestic and international confidence in developing securities markets.

 The session was rounded-up with a presentation on: "Meeting the dual challenge of securing domestic and international confidence in developing securities markets", by Dr. Fadi Khalaf, Secretary General of Union of Arab Stock Exchanges, who said the global financial crisis had given birth to confidence and trust crisis on the markets , adding that by losing trust in companies investors resorted to putting their trust in governments who now stand as surety for the companies, on the one hand and represent a safe haven for investors, on the other hand.

 The third and final session, which also had three speakers speaking on the "Repercussions of the global financial crisis on regulators and financial markets", had H.E. Maryam Al-Suwaidi as the moderator.

 Dr. Obaid Al-Za'abi, Research Advisor and Director of Research and Development at the SCA, made a presentation on: "the potential for the development of Islamic capital market products after the global financial crisis". He pointed out that the major factors which guarantee the ideal performance of Islamic capital market include its strong and resilient organizational structure, unified Sharia rules and principles, as well as in-depth and liquidity availability on the market. He said there was the need to agree to a common way of pricing assets, risk management and to ensure the availability of qualified personnel in resources transfer services. "These factors are the main factors needed to start a high-standard and advanced Sukuk market project," he added.

 Rainer Geiger of the OECD-MENA Investment program was the final speaker of the event. Making a presentation on: "the future of long term investment in the region taking into consideration the aftermath of the global financial crisis", he said investment opportunities in the MENA region in the years ahead look brighter and more attractive than ever before and attributed that to the rapid recovery by the markets in the region.