After issuing the decision of its Structure
Financial Market Advisory Council Holds its first meeting in Abu Dhabi
HE. Sultan Al Mansoori:
The Council is entrusted with studying the developments in financial markets and proposing steps to deal with them.
Recommending products and instruments that contribute to the development and promotion of markets and increase of their competitiveness regionally and globally.
Dr. Obaid Al-Zaabi:
The Council discussed ways to enhance market performance, increase trading and support governance and the impact of financial technology
HE/ Sultan bin Saeed Al Mansoori, Minister of Economy and Chairman of the Securities and Commodities Authority’s Board of Directors, stressed the important role that “the Financial Market Advisory Council” will play in raising recommendations and studying the conditions of the securities industry. He pointed out that: "The Council, with its advisory capacity, is entrusted with several functions, including studying updates, following up developments in the regional and global financial markets and their impact on the financial markets in the State, and proposing steps for dealing therewith. It is entrusted also with studying the draft regulations that the Authority aims at issue and make comments and suggestions thereon, studying the current legislations and regulations in force in the Authority and the financial markets and proposing the necessary amendments for their development. In general, the council will present and exchange views on issues related to the development of the legislative, regulatory and professional system of the financial markets in the State.”
On the occasion of the first session of the Council, HE said: "The Council functions also include reviewing the strategic plan and future outlook for the Authority, proposing and discussing strategic directions, initiatives and objectives, and proposing products and instruments that help in developing and promoting the State’s financial markets, achieving their objectives and increasing their competitiveness at the regional and global levels.”
The Financial Market Advisory Council held its first meeting in Abu Dhabi under the chairmanship of Dr. Obaid Al Zaabi, the Securities and Commodities Authority’s Chief Executive Officer.
The meeting was attended by Abdul Aziz Al Nuaimi, Vice President of the Abu Dhabi Securities Exchange’s Chief Executive Officer, Hassan Al Serkal, Operations’ Chief Executive Officer of DFM, Lexus Mell, Chief Executive Officer of DGCX, and representatives of the Abu Dhabi Global Financial Market, the Dubai International Financial Center and brokerage and financial service firms in the State markets.
Measurement of companies and financial markets performance
During the meeting, the indicators of companies and financial markets performance measurement were presented. The recommendations proposed by the participants discussed the development of the criteria for speeding up the payment of dividends and settling market operations, increasing the percentage of foreigners’ ownership in joint stock companies, looking for innovative ways to deliver to; small shareholders; their profits and informing them therewith, and developing ways to deliver information from markets to investors.
The representatives of the financial market discussed how to take further measures to enhance confidence in the financial market and listed companies through supporting disclosure and transparency, and encouraging the government to sell shares of its subsidiaries, which will contribute to increasing the number of proposals and companies listed in the market and deepening thereof, and developing investment awareness for all categories of investors.
The participants also proposed promoting and developing the regulation awareness initiatives for the joint stock companies and brokerage and financial services companies, involving pension funds and government companies in Authority meetings with the industry partners and the financial market parties and communicating with them continuously to encourage them to invest in the financial market, as well as encouraging the establishment of new investment fund and registering new financial products, stressing the importance of reviewing the regulations of the Authority and amend them in line with the status of markets and not only global practices.
Enhancement of market trading
The participants also reviewed the procedures and means necessary to enhance the trading of the markets, including simplifying the registration procedures for trading and investment in the financial market, as is the case in other global markets, and simplifying procedures for obtaining information on stock balances, taking into account that the foreign investor wants to see the current market similar to the external market in which it trades or in its home country. Investors shall also be involved in meetings with industry stakeholders to find out their requirements, express their observations, and prepare questionnaires on a regular basis to explore their views.
The participants stressed the importance of existence of a separate Central Clearing Party (CCP) to ensure that transactions are executed independently from the financial market as is practiced globally to enhance confidence in the market.
The attendees indicated the need for the Authority to accelerate the approval of the controls set by the market, and the importance of encouraging the enforcing and utilizing a number of regulations adopted by the Authority such as short selling, lending and borrowing of securities, and strengthening the procedures taken by the Authority to restructure the market and switch to markets compatible with best global practices.
Enhancement of corporate governance and institutional discipline
In terms of governance, participants discussed the idea of developing a governance index and ways to educate investors and raise awareness of their rights towards boards of directors of joint stock companies. The discussion dealt with high remuneration got by some members of the companies’ boards of directors, the strict application of the regulation of governance, inspection and monitoring of companies and the strict application of penalties on violators of the controls of wise management, as well as addressing the issue of the registered owner and the beneficiary owner to know the true owner of shares. They developed more rules that prevent the manipulation of speculators on small and low liquidity stocks, and other initiatives aimed at enhancing the levels of transparency and confidence in the markets.
The attendees called for measures to be taken to increase the share of institutional investors, to pay greater attention to the legal drafting of the regulations of the Authority and to translate them with the utmost precision. The banks should also be required to transfer Structured Products from the Central Bank to the Authority if they fall within its competence. Further coordination shall be made closely with both the Central Bank and the Free Zones.
As for financial technology, participants pointed to the tendency of the markets to use blockchain technology in the general assembly voting, and the importance of considering adoption and generalization of the same in the financial markets and organizing and benefiting therefrom in speeding up the various processes, including registration of investors, and researching on how to use Smart Contracts in the markets and in securities.
Speakers also addressed the negative impact of digital currencies - particularly the Bitcoin- despite their risks on the liquidity of markets as investors can trade them 24 hours of the day. They called also for not allowing trading in Bitcoin in the trading platforms as long as it is an unorganized product.
They discussed also the extent to which (individuals/banks/ institutions) in World countries can be approved to complete the procedures required to implement the (Know Your Client) KYC principle in the home country of the foreign investor, and proposed benefiting from the experiences applied in other countries by finding one company to complete these procedures for all financial institutions to avoid duplication of work.
HE Sultan bin Saeed Al Mansoori, Minister of Economy and Chairman of the Authority’s Board of Directors, has issued a decision to form the Council, headed by the Securities and Commodities Authority’s Chief Executive Officer. Its members include the heads of the boards of directors of public joint stock companies, general managers and Chief Executive Officers or their representatives in the following entities:
• Dubai International Financial Center.
• Abu Dhabi Global Financial Market.
• Abu Dhabi Securities Exchange.
• Dubai Financial Market
• The largest listed company of three major sectors in terms of trading volume and values.
• The two largest brokerage companies in terms of the number of investors in the financial markets.
• One company of financial services companies licensed by the Authority, which represents the activity.
The decision sates that each body shall choose its representative in the Council and notify the Authority. The Council shall have a rapporteur from the employees of the Authority.
The decision included the work mechanism of the Council so that the Council meets at least twice a year, or whenever necessary, based on prior coordination. The Council meeting shall be valid in the presence of the majority. The Authority’s Chief Executive Officer shall submit an annual report to the Board of Directors on the outcomes and results of the Council meetings.