Annual report of Security and Commodities Authority reveals:

25 legislations enacted by Authority during 2018

Penal measures taken against violators included warning, suspension, fines and filing reports with the competent authorities

Reviewing requests for renewing registration of auditors of Public Joint Stock Companies and Investment Funds in the Authority records.

Companies that disclosed the corporate governance report during 2017 are (89) local Public Joint Stock Companies out of (90) companies subject to the requirements of governance, with a disclosure rate of 98.89%

Authority has licensed 78 companies to carry out a range of financial and investment activities and services

Authority is the Chairman of Growing and Developing Markets Committee and Vice Chairman of International Organization of Securities Commissions “IOSCO” for the first time.

Significant activity at the level of investment awareness, training, vocational training and human resources.

The Authority issued its annual report for 2018. The report highlights the projects and initiatives carried out by the Authority during the year at all levels, and unveils; for the first time; many results and information as follows:

Legislative level:

During the past year, the Authority issued an integrated package of regulations and decisions that contributed to giving the financial markets more flexibility to develop their services and products and improve their performance. The number of legislations and legislative amendments reached 25 legislations, including:

First: The legislations issued by the Authority Chairman:

The most important are:    
• Chairman of the Authority’s Board of Directors’ Decision No. (18 R.M) concerning licensing of Credit Rating Agencies.
• Chairman of the Authority’s Board of Directors’ Decision No. (19 R.M) concerning regulation of the central depository activity.
• Chairman of the Authority’s Board of Directors’ Decision No. (20 R.M) concerning issuing and offering of Islamic Securities.
• Chairman of the Authority’s Board of Directors’ Decision No. (22 R.M) concerning Regulation of Derivatives Contracts.
• Chairman of the Authority’s Board of Directors’ Decision No. (23 R.M) concerning amendment of the decision No. 4 R.M of 2017 concerning the regulation of the Activity of Administrative Services for Investment Funds.

Second: legislations issued by the Chief Executive Officer

The most important are: 
• Administrative Decision No. (17) concerning the amendment of the schedule of violations and administrative penalties for the application of Authority  law and regulations.
• Administrative Decision No. (23) Concerning the procedures and internal monitoring related to the publication of the names of the violators.
• Administrative Decision No. (45) concerning the amendment of the real estate investment fund controls and the criteria for assessing in-kind shares.
• Administrative Decision No. (72) Concerning the amendment of the administrative decision No. (45 R.T) of 2016 concerning the complaints regulation regarding financial markets transactions.

Monitoring Level

The Authority has played the role entrusted thereto with regard to detecting the manipulations and violations occurring in the financial market in the State in the field of trading in the markets, or in the monitoring and supervision of all matters pertaining to the entities under its supervision, as we will present as follows:

Firstly:- Authority has taken measures aimed at protecting the rights of investors as follows:

• Imposing fines on the entities violating the Authority law and regulations issued thereunder, according to the circumstances of each violation. Number of the imposed financial fines reached (27) fines.
• Suspending (4) companies licensed by SCA.
• Serving (272) notices to the entities violating the Authority law and the regulations issued thereunder, and 3 notices were served to investors.
• Filing 13 reports with competent authorities in the State for illegal practices committed in violation of the Authority law and the regulations issued thereunder.
• Addressing (6) warnings to the entities licensed by Authority in addition to one notice to investors.
• In terms of resolving disputes related to trading in securities, Authority has received (6) complaints referred to it throughout the year, as well as 52 applications in various subjects related to the capital market.
• Through the electronic monitoring of trading, 31 manipulation cases has been detected and referred to the Execution Department to take the necessary actions in this regard. The cases included:

o 19 trading cases by insiders.
o 10 cases of other market manipulations.
o Two Front-running cases.

Authority supervised the convening of general assemblies’ meetings of local Public Joint Stock Companies listed in the financial market. The number of general assemblies held during 2018 was (141) general assemblies, of which (115) annual general assemblies held to approve the annual financial statements of the company.
Authority also followed up the disclosure of the listed companies subject to the Chairman of the Authority’s Board of Directors’ Decision No. 7 / R.M of 2016 on the standards of institutional discipline and the governance of Public Joint Stock Companies for the corporate governance report for 2017. The number of companies that disclosed the governance report during the past year was (89) local Public Joint Stock Companies out of 90 companies subject to the requirements of governance and required to disclose the governance report, with a disclosure percentage of 98.89%. One company did not disclose the report because it was established at the end of 2017.
By the end of 2018, the Authority reviewed the applications for renewing the registration of the auditors of the Public Joint Stock Companies and Investment Funds in Authority records. The number of audit companies and offices registered with Authority reached (10) companies, which are authorized to audit the accounts of Public Joint Stock Companies and Investment Funds, in accordance with Article (244) of the Federal Law No. (2) of 2015 concerning commercial companies.

Secondly: Authority carried out its inspection plan as follows:

 Fully completing the periodic inspection plan for the companies licensed by Authority of the annual plan by (59) different activities companies, as follow:

o Periodic inspection of 18 Securities Brokerage Companies.
o Periodic inspection of 14 Commodities Brokerage Companies.
o Periodic inspection of 11 Financial Consulting Company.
o Periodic inspection of 4 Investment Management Companies.
o Periodic inspection of 5 Promotion And Definition Companies.
o Periodic inspection of 1 Safe Custody Company.
o Periodic inspection of 4 Joint Stock Companies.
o Periodic inspection of the Abu Dhabi Securities Market.

 Fully completing the sudden inspection plan on companies licensed by the Authority, with 100% of the orders received from the relevant departments by 12 companies as follows:

o Inspection of 9 Securities Brokerage Companies.
o Inspection of 2 Commodities Brokerage Companies.
o Office inspection of (9) Securities Brokerage Companies to verify that they comply with the decision of separating the company's accounts from customers during the days of the month.

 Fully completing Auditing the monthly reports received from the companies licensed by the Authority as follows:o Preparing 12 monthly reports on 35 brokerage companies regarding the results of auditing the monthly account separation reports received from the companies and referring the violating companies to the Execution Department. 

o Preparing 12 monthly reports on 35 brokerage companies regarding the results of auditing monthly solvency reports received from companies, and referring the violating companies to the Execution Department.
o Preparing 12 monthly reports on 35 brokerage companies regarding the results of auditing the monthly reports of accounts receivable and payables received from the companies and referring the violating companies to the Execution Department.
o Preparing 12 monthly reports on 35 brokerage companies regarding the results of auditing the monthly margin trading reports received from the companies, and referring the violating companies to the Execution Department. 
o Preparing (2) semi-annual reports on 35 brokerage companies regarding the results of auditing the periodic reports received for the penetration testing, and referring the violating companies to the Execution Department. 
o Preparing (4) quarterly reports on 35 securities brokerage companies and 37 commodities brokerage companies regarding the results of auditing the quarterly financial statements received from the companies, and referring the violating companies to the Execution Department.
o Preparing an annual report on 35 securities brokerage companies and 37 commodities brokerage companies regarding the results of auditing the annual financial statements received from the companies, and referring the violating companies to the Execution Department.
o Preparing an annual report on 37 commodities brokerage companies regarding the results of auditing accounts separation reports received from the companies, and referring the violating companies to the Execution Department.
o Preparing (60) semi-annual positive penetration report on the companies holding an online trading or direct trading license, and referring the violating companies to the Execution Department

•  Notifying and following up (63) companies on the shortcomings indicated by the results of the periodic inspection of all activities licensed by the Authority, and following up the remediation within 3 months from the date of notification.

•  Completing of a guiding form of the internal auditor report to measure the compliance and risk of the commodity brokerage activity by 100% and circulating the same on the companies to achieve self- monitoring.

•  Fully completing the issuance of a guiding manual of work of representatives of intermediaries and trading director in the companies in the framework of awareness of companies to the functions of self-monitoring.

•  Fully completing a report on monitoring of failures in market settlement processes, following the required remediation and considering the same as one of the criteria of the annual inspection plan.

• Notifying the company of the shortcomings indicated by the results of the periodic inspection of companies and follow-up of remediation within a specified period, which contributed to reduce the percentage of violations and fines and raise the efficiency and effectiveness in the self-monitoring processes of companies.

•  Notifying the security and commodity brokerage companies of common mistakes and best practices based on the results of the inspection for the previous year.

• Notifying the security and commodity brokerage companies of the priorities of the inspection pivots for the year at the beginning of each year.

•  Applying the standards of solvency and rules of separating accounts on commodity brokerage companies.

• Setting standards for the financial solvency of management companies and investment management companies, which continued until March, 2019.

Regulatory level:

A- The Authority has licensed a number of companies to carry out financial and investment activities and services to enhance the services offered to investors and provide them with greater options to obtain quality services that contribute to their investment decisions. The number of companies licensed by the Authority reached 78 companies for practicing financial and investment activities and services as shown in the following list:

B- At the regulatory level, the Authority has also made the  following:
Regularization of (70) foreign funds and registration of (100) new foreign funds with the total of (170) foreign investment funds.

C- The Authority has also granted its approvals for the following processes, listings and issues:

•  Acquiring the entire shares of Al Hilal Takaful – PJSC by Takaful Emirate PJSC.

•  Listing Maldives Government bonds in Abu Dhabi Securities Exchange for US $ 100 million.

•  Listing Sukuk of Al Dar Sukuk (Limited). ( a joint listing in Euronext Dublin ) the main listing market and Abu Dhabi Securities Exchange (ADX) at a value of US $ 500 million.

• Listing the General Holding Corporation PJSC (SENAAT) in the Abu Dhabi Securities Exchange at a value of US $ 300 million.
   Listing Reem Investments company, a Private Joint Stock Company, in Abu Dhabi Securities Exchange with a capital of AED 77.5 million.
   Listing Wahat Al Zaweya Holding, a p Private Joint Stock Company, in Abu Dhabi Securities Exchange with a capital of approximately AED 2.3 billion.

•  Listing of (2) Foreign Companies in Dubai Financial Market “DFM” with a capital of approximately US $ 997 million.

•  Issuing non-convertible Sukuk to Abu Dhabi Islamic Bank at AED 2.75 billion.

•  Issuing non-convertible Sukuk to Dana Gas shares for AED 1.95 billion.

•  Issuing non-convertible Sukuk to Union Properties shares for AED 1 billion.

•  Issuing convertible bonds to DXB Entertainments at AED 1.23 billion.

•  Issuing mandatory convertible Sukuk to Gulf Navigation Holding Company for at 100 million.

•  Issuing capital increase shares of 11 listed companies with a total value of AED 4.43 billion.

International relationship

• For the first time in the region's markets, Dr. Saif Al Zaabi, Chief Executive Officer of the Authority, selected for the office of Chairman of The Growth and Emerging Markets Committee (GEMC)- the largest committee within the International Organization of Securities Commissions (IOSCO) for the term 2018-2020.

• The Authority was elected as a member of the Board of Directors of IOSCO and the Authority Chief Executive Officer was selected for the office of Co -Chairman of the Board of Directors of IOSCO for the term 2018-2020.

•  Authority Chief Executive Officer was official named as Co-Chairman of the OECD’s MENA Working Group on Corporate Governance.

Investor Awareness:

As for awareness and education, the Authority participated in the activities of "Global Investor Week" organized in coordination with IOSCO. This event included the launch of the document of "Investor's Rights" on the sidelines of its activities. It also launched three awareness campaigns in newspapers, satellite channels and social networking networks. It organized workshops and discussion panels for the specialized Abu Dhabi and Dubai public, 10 seminars and lectures for school and university students, as well as a public awareness seminar for investors.

In addition, The Authority published more than 500 short awareness messages in newspapers, magazines and various publications, issued 2 awareness booklets for investors and interested parties, and published 36 awareness issues throughout the year in the newspapers as part of the national project for investment awareness and financial coverage.

Training, professional testing and human resources:

The Authority has launched a program on updated professional licensing tests, which included new tracks for the following posts: "Promotion Manager", " Manager / Head of Investment", "Anti Money Laundering" and "Risk Management Officer". During this year, the Authority professional training and testing center held 9 specialized training workshops.
The Authority won the Emirates Human Resources Award in the Federal Government (Customers category) in the fourth session of the award. The Conference of Institutional Excellence held under the patronage of Abu Dhabi Chamber, honored the Authority for winning the second place in the Innovation Award at the level of organizations.