In a meeting chaired by H.E. Sultan Al-Mansoori,
The SCA Board of Directors approves the Regulatory Controls for Fintech
The Board issued a directive to regulate the ICOs to be recognized as Securities
Responding to the requests to amend the Regulations as to Brokerage for the reduction of the banking guarantee from the Trading and Clearing Member
Approving the Pilot Launch of the qualification project to prepare the UAE students of the Colleges of Technology for employment in the Financial Markets
The Board of Directors of the Securities and Commodities Authority (SCA) held its fourth meeting of its sixth term at the SCA office in Dubai. The meeting was chaired by H.E. Engineer Sultan Bin Saeed Al-Mansoori. Minister of Economy and Chairman of SCA Board of Directors.
The Board discussed a number of initiatives aiming at upgrading the financial activities and services platform in the UAE securities sector to match the best international standards and practices. The meeting also addressed various subjects and issues of significance in connection with the securities sector as further detailed below:
Regulating the Issuance of ICOs and Recognizing them as Securities
In light of the rapid development of the digital tokens market and the response thereto by the regulators in a number of countries worldwide towards regulating the initial coin offerings (ICOs), the SCA Board of Directors approved the SCA plan to regulate the ICOs and recognize them as securities. The Board of Directors, having reviewed a study on the best international practices in this regard, issued a directive that the procedures for trading digital token are to be regulated. The plan developed by the SCA includes a set of mechanisms as part of an integrated project to regulate digital securities and commodities.
During the meeting, the Board of Directors also viewed a presentation on the proposed mechanisms for the ICOs. The presentation addressed the regulation of the issuance of such instruments including: the type of issue (private/public), the entities that can make the issuing and the legislative requirements thereof, such as, inter alia, registration and fees, the Blockchain operators, the targeted entities by issue type, the minimum content of the prospectus (Whitepaper), liability thereof, and whether registration is or is not required by issue type.
The presentation also discussed the licensing requirements for the platform of issuance, trading, clearing, listing, custody, settlement and payment to be defined as a central trading, custody, clearing, and depository platform, as well as the legal form to be taken by such platform. Furthermore, the presentation addressed the regulation of listing and trading of such securities, smart contracts used in the securities, the opening and registration of an e-Wallet on Blockchain, especially the KYC and money-laundering requirements.
Moreover, it was emphasized that SCA should raise the awareness of investors on digital securities and commodities, with focus on the need that the SCA should adopt the best international practices in handling this new subject and consult with the industry and the markets, locally and internationally, towards its regulation.
Regulatory Controls of FinTech
In view of the rapid development of the financial technology (FinTech) sector worldwide and the ongoing introduction of new and innovative financial products and services, the SCA Board of Directors approved draft regulations setting the regulatory controls for the FinTech sector in the form of a pilot regulatory environment (Sandbox) to enhance and support the financial integrity of the financial technology companies known as “FinTech" companies.
Amendment of the Brokerage Regulations
In light to the request of a number of brokerage firms (trading and clearing members) relating to the requirement to provide a bank guarantee in the amount of 50 Million Dirhams, and in response to the proposals made by such firms, the SCA agreed to reconsider this issue without prejudice to the current regulatory platform.
In this regard, the Board of Directors agreed to amend the Regulations as to Brokerage in Securities - until the Central Clearing Company (CCP) is launched – to provide for a capital of 30 million Dirhams and a bank guarantee of 20 Million Dirhams per trading and clearing member. However, a condition shall be requiring the maintaining of a minimum equity of 75% of the paid-up capital on continuous basis.
This amendment would contribute to maintaining value-add brokerage firms while obliging the firm to maintain a strong financial position all the time.
Financial Analysis Report of Listed Companies and Brokerage Firms
In line with the continuous follow-up of the positions of the listed local public joint-stock companies to ensure their financial stability, and in compliance with the provisions of the Commercial Companies Law No. 2 of 2015, the SCA Board of Directors reviewed a report on the financial analysis of the listed public joint-stock companies and the sectors in Abu Dhabi Securities Exchange (ADX) and Dubai Financial Market (DFM) for the first quarter of 2018. The Board also reviewed a report on the financial analysis of the securities brokerage firms operating in the UAE for 2017.
Approving the Pilot Launch of the qualification project to prepare the UAE Students in the Colleges of Technologies for employment in the Financial Markets
With reference to a recommendation approved in the 5th meeting of the 4th term of the Board of Trustees of the Securities and Commodities Authority's Training Center, the SCA Board of Directors approved the pilot launch of the qualification project to prepare the UAE students in the Colleges of Technology for employment in the financial markets. The project will cover:
- The costs of the three professional tests for the course of broker representative;
- No more than 50 UAE national students;
- 100% of the test costs for the first time and 50% for a re-setting test.
- The pilot phase may not be longer than two years from the beginning of the academic semester 2018/2019.
- Evaluating the pilot launch, measuring the results and submitting the recommendations.
- Friendly coordination with the industry to provide training or job opportunities for those who pass the tests.
Upcoming Meeting of the MENA-OECD Corporate Governance Working Group
The SCA Board of Directors discussed a proposal to host the upcoming meeting of the MENA-OECD Corporate Governance Working Group in the UAE in 2019 as the SCA Chief Executive Officer is a co-chair of the Working Group. The Board agreed to host the Working Group subject to the limitations and controls set out by the Board of Directors in this respect.
The Board also decided to explore and enhance the cooperation ties with the OECD and the Working Group in the various fields of governance, especially in the area of developing governance regulations for family businesses.
Created in 2005, the OECD Corporate Governance Working Group has gained experience in conducting specialist studies and preparing reports on governance, which contributed to the development of corporate governance regulations by dedicating a forum to discuss the priorities in the area of corporate governance by raising debate on the relevant issues and exchanging international experiences in this field.
SCA wins the Emirates Award for Human Resources
The Board of Directors also reviewed a memo on the SCA winning the Emirates Award for Human Resources in the area of customers. The Emirates Award for Human Resources is one of the five key awards which represent the categories of the Emirates Award for Human Resources in the Federal Government. These awards aim at reflecting the vital role of the human resources in the excellence at the level of federal government agencies. The awards receive the kind attention of H.H. Sheikh Mansour bin Zayed Al Nahyan, Deputy Prime Minister of the United Arab Emirates, Minister of Presidential Affairs, and Chairman of the Ministerial Development Council.
SCA achievements in innovation for the year
The Board also reviewed a memo on the results of the SCA achievements in innovation for 2018. The memo contained a report on the most important initiatives implemented by the SCA in this respect.