The meeting discussed a number of initiatives which aim at developing the platform of financial services and activities associated with the UAE Securities Sector to bring them in line with the best international standards and practices. The meeting addressed a number of important topics and issues in relation to the Securities Sector, as presented below in details:
Market Marker Performance in the Financial Markets
The Board reviewed a study on the Market Maker performance in the UAE financial markets and looked over a presentation on the Market Maker's roles and the challenges encountered, and the industry requirements therefor. The Board ordered to the SCA management to coordinate with the financial markets and meet with the licensed Market Makers for a study on the Market Maker performance in the UAE markets in order to identify the challenges encountered and the appropriate means to promote the Market Maker's role and optimize the utilization of Market Making operations, and enable the Market Marker to perform its aspired role in enhancing the values and volumes of trading, as per the best international practices.
Financial Services Companies' Assessment Results
The results of the first round of the program to assess and classify the financial service companies were reviewed based on the 5-star methodology (STAR Method: situation, task, action and result) for the year 2018. The program was applied on a range of securities brokerage firms which voluntarily took part in the program.
The program aims at creating a competitive environment among the financial service companies to satisfy the excellence and leadership criteria, and at enabling such companies to achieve institutional maturity, effect enforcement merit in the financial sector, and reduce the costs of supervision and implementation, boost the mechanisms and approaches that contribute to the protection of investors and instill the principles of corporate governance, in addition to enabling the investors to select the most outstanding, committed and capable financial service provider that can provide services with fairness, transparency and integrity.
The SCA Board ordered the management to continue the upgrading and development of the assessment system in accordance with the determinants set within the general framework of classification fundamentals and criteria, and to complete the procedures for the application of the classification program.
Report on Financial Analysis of Listed Companies
In a follow-up of the conditions of the listed local public joint-stock companies to ensure their financial stability, and pursuant to the provisions of the Commercial Companies Law No. (2) of 2015, the Board reviewed a report on the financial analysis of the listed public joint-stock companies and sectors in Abu Dhabi Securities Exchange (ADX) and Dubai Financial Market (DFM) for 2018. The Board ordered to follow up theconditions of the companies and take the necessary procedures in accordance with the law and regulations.
Furthermore, the Board reviewed a note regarding the amendment of the SCA Board of Directors' Decision No. (25) of 2015 concerning the Registration of Auditors of Public Joint-Stock Companies and Mutual Funds. The Board agreed to amend the maximum limit for a consecutive audit period to three years for the auditor (partner) in an audit firm, and to six years as maximum for an audit firm. Doing the audit against is no more permitted before the lapse of two years after the said periods.
In this regard, the Board ordered coordination with the Ministry of Economy and the Central Bank to ensure consistent application of the auditors' practices in regulations issued by the three authorities, namely, the SCA, Ministry of Economy, and the Central Bank.
Awareness-Raising Activities within the National Investor Awareness and Financial Inclusion Project
The Board reviewed a report on the awareness-raising activities conducted in 2018 under the “National Investor Awareness and Financial Inclusion Project" which involved adopting 6 communication methods, including newspapers, printed publications, satellite channels, video and visual materials, social media networks, and electronic media, in addition to direct personal contact, which included 33 different artistic techniques and communication channels.
The report indicated that 50 awareness articles, 800 awareness messages, financial contests, and 10 infographics were published in daily newspapers. Further, a large space was dedicated in Awrak Maliyah Newsletter, issued by the SCA, to address the financial and investment community for the purposes of investment education.
The National Investor Awareness Project also included broadcasting of 20 awareness cartoon clips on 3 satellite channels throughout four months in 2018. Further, the same cartoon videos were broadcasted in the movie theaters and copies thereof were combined in a video folder and were distributed on the investors and customers. Moreover, 20 visual awareness alerts were broadcasted on the ATM screens in all cities countrywide, and they were broadcasted on illuminated screens on some of the vital crossroads. Additionally, 14 TV interviews were conducted to introduce the SCA's regulations and the rules that govern tradings on the financial markets.
The report covered the awareness raising activities conducted through the SCA social media accounts, especially Twitter, Facebook, YouTube, Instagram, and Snapchat which included a financial cultural contest, educational cartoon videos, and short messages.
The electronic media involved in the National Investor Awareness and Financial Inclusion Project included sending hundreds of thousands of SMS which contained awareness advice for the investors participating in the financial market. SCA embarked upon designing an electronic application to introduce the importance and principles of governance. Such application targets the members of boards of directors and governance officials in the listed companies. Further, SCA embarked upon creating a website as part of its electronic portal which will be dedicated for awareness.
Moreover, the activities of the National Investor Awareness and Financial Inclusion Project included issuance of a number of publications; including 2 simplified investment awareness guidebooks, and 2 books on investor rights and corporate governance, in addition to 4 awareness brochures and a number of posters.
As for the direct personal contact, the report indicated that with the participation of ADX, DFM, and DGCX, 28 awareness-raising activities were organized, including seminars, panel discussions, and briefing tours for the students at the trading floors in the financial markets, in addition to the guiding exhibitions and awareness forums organized at the shopping centers and places of assembly. Further, the investor rights draft document was presented for community debate within the industry.
Listing of Futures Contracts on the Commodities Exchange
The SCA Board also reviewed two applications submitted by Dubai Gold and Commodities Exchange (DGCX) and approved DGCX application to list Futures on the basis of the international prices of aluminum and zinc.
The Board also agreed to change the margin approach in the settlement of trades in the Commodities Exchange by amending Clause (20/b/2) of Article (10) of the SCA Board of Directors' Decision No. (11) of 2015 concerning the Regulations as to Clearing Operations in the Commodities Markets to read as follows:
“The Clearing Company shall close out all its own and its members' financial positions in one day (One day close out exposure)."