“Enhancing the performance of the country’s financial markets is of top priority. SCA will be working with its partners to develop a resilient investment environment that serves the targets set for the next 50 years,” Bin Touq says.
The board amended the legislation regulating the trading of derivatives contracts on the DFM
Abu Dhabi, March […], 2021: The board of the Securities and Commodities Authority (SCA), in its new formation, held its first meeting this year, which was chaired by H.E. Abdullah bin Touq Al Marri, Minister of Economy and Board Chairman, using video conferencing technology. The meeting discussed initiatives aimed at improving financial services and activities associated with the securities sector in line with the best international standards and practices.
“Enhancing the performance of the country’s financial markets to correspond to the best global practices will be of top priority for SCA and its board of directors in the coming period. We will work with different partners to promote the investment environment within domestic financial markets and to support their legislative infrastructure pursuant to the UAE Vision 2021 and the country’s targets and goals for the next 50 years,” Abdullah bin Touq Al Marri said, indicating that “the first meeting of the board focused primarily on development matters, including obliging listed companies to appoint at least one woman to their boards, regulating and transferring operational and executive powers between SCA and domestic securities markets, introducing new procedures to develop mechanisms concerning commissions on derivative contracts trading, and regulating central depository activities.
Distribution of competencies and powers between SCA and the financial markets
The board agreed to the development of a rulebook for financial activities in a manner that does not interfere with the competencies that will be later transferred to the financial markets pursuant to Federal Decree-Law No. 22 of 2020 on the Distribution of Competencies and Powers between the Securities and Commodities Authority and the Licensed UAE Securities and Commodities Markets. The board approved the transfer of operational and executive powers to the markets as agreed upon between SCA, the Dubai Financial Market, and the Abu Dhabi Securities Exchange. It also agreed to have the markets develop operational rules and then present them to SCA after having them reviewed by their legal departments prior to their approval by their own boards. In this way, SCA will be able to review such rules and propose the amendments it deems necessary to ensure their consistency with the standards developed by the International Organization of Securities Commissions. The board also approved SCA’s signing of a service-level government, SLA, with financial markets.
Women’s representation on the boards of listed companies
As part of its keen efforts to empower Emirati women and encourage them to play a greater role on the boards of listed companies, the SCA board agreed to oblige listed companies to have at least one woman appointed to their boards. This was done by amending Clause 3 of Article 9 of The SCA Board Chairman’s Decision No. (3/Chairman) of 2020 Approving the Governance Guide for Public Joint-Stock Companies.
Amendment to legislation regulating commissions on derivative contracts trading
In an attempt to achieve more consistency with the best global practices and to contribute to the success of the market’s plan and initiative to launch a new platform for derivatives trading and encourage the public to perform trades on such platform, the SCA board approved a proposal to amend the commissions on derivative contracts trading. It also approved amendments to the legislation regulating trading commissions for derivatives contracts as well as to the provisions of The SCA Board Chairman’s Decision No. (32/Chairman) of 2018 on Technical Service Fees Payable to the Securities and Commodities Authority.
The board agreed to allow central depositories to act as registrars for private joint-stock companies and to keep records of non-listed public joint-stock companies by amending Clause 1 of Article 3 of The SCA Board’s Decision No. (3) of 2009 Regulating the Operations of Registrars of Private Joint-Stock Companies and The SCA Board Chairman’s Decision No. (19/Chairman) of 2018 Regulating Central Depository Activities.
New FX Rolling Futures Contracts listed on the Dubai Gold and Commodities Exchange (DGCX)
The SCA board approved the listing of new foreign currency pairs and metals as part of the DGCX’s FX Rolling Futures Contracts under a set of controls and regulatory conditions, most notably that the DGCX should carry out studies to poll market actors to determine the expected demand for these contracts and their success potential. The DGCX must also ensure that the central banks issuing the currencies associated with these contracts have no legal objections to their listing. The studies referred to should be presented to SCA’s competent department one month prior to the listing. The DGCX must also conduct studies to evaluate the performance of the regularly listed contracts to evaluate their success rate, and must promote each listed contract sufficiently in advance to attract domestic and international investors.
The SCA board also examined a study by an external consultant, proposing the provision of support to “too big to fail” companies and recommending that a specialized committee, co-chaired by the Minister of Economy, the Central Bank, the Ministry of Finance, and SCA, be formed to implement the outcomes of the study.
The board assigned the SCA management with putting forward a study on the Emiratization policy implemented in the securities sector, explaining the mechanisms used and the incentives introduced to encourage licensed companies to employ UAE nationals.