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SCA Financial Rules & Regs > Chapter 1 - Regulatory Infrastructure > Flashcards

Chapter 1 - Regulatory Infrastructure Flashcards

1
Q

SCA’s Purpose

A
  • Provide opportunities to invest
  • Develop Investment Awareness
  • Ensure Financial and Economic Stability
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2
Q

SCA is not permitted to…

A
  • Enter into Commercial Activities
  • Have private interests of its own
  • Own or issue securities
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3
Q

What can SCA issue regulations concerning (without consultation)?

A
  • Functioning of SCA
  • Licensing and Monitoring of Markets
  • Acceptance, listing, and cancelling or suspending the listing of any securities
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4
Q

What can SCA issue regulations concerning (with consultation/coordination with Markets)?

A
  • The functioning of the market;
  • Brokers and the regulating of their functions;
  • Trading, clearance, settlement, transfer of ownership and custody of securities;
  • Membership of the market;
  • Disclosure and transparency; and
  • Arbitration in disputes arising from trading in securities and commodities.
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5
Q

Who constitutes SCA’s board?

A
  • Chairman (Minister of Economy)
  • Chief Executive
  • 5 persons of experience nominated by the Minister of Economy
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6
Q

How long do the board serve?

A

4 year, renewable once except the CEO

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7
Q

Why would a board member foreit their position?

A
  • conviction of an offence of dishonour or breach of trust;
  • bankruptcy; or
  • failure to attend three consecutive meetings without an acceptable excuse.
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8
Q

How frequently does the board meet?

A

Minimum every 2 months, or on request by at least 4 members

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9
Q

Quorum?

A

Majority of members + Chairman or deputy

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10
Q

Resolution quorum?

A

Majority of those present. Chairman has deciding vote in a tie

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11
Q

How often does the board report to the Council of Ministers?

A

Every 6 months

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12
Q

What are the responsibilities of the Directors?

A
  • Ensure that the regulations are applied.
  • Collect notifications and complaints relating to the activities of the markets or brokers
  • Ensure markets and brokers issue financial statements, within one month following the end of the financial year.
  • Ensure markets have adequate disclosure rules in place
  • Ensure transparency and disclosure
  • Issue and maintain resolutions concerning membership of the markets as well as concerning trading in securities and commodities in accordance with the provisions of the Law and the regulations issued pursuant thereto.
  • Undertake all other acts which assist the board in achieving the objectives of the SCA.
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13
Q

SCA’s Income?

A
  • Annual Fees from Government

- Income from listing fees + trading fees + brokerage fees

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14
Q

Responsibilities of a Market’s Board?

A
  • Appoint the market’s general manager and his deputy.
  • Establish the organisational structure and annexes, the internal regulations and all administrative
    rules and instructions.
  • Monitor the trading transactions in securities and commodities on a daily basis t
  • Present reports and data to the SCA to ensure transparency
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15
Q

What are the responsibilities for a licensed broker?

A
  • Compliance with the provisions of Federal Law No. 4 of 2000, the associated regulations issued
    and all other resolutions and instructions relating to the market.
  • Refrain from any act that may harm the reputation of the market, its members or the transacting
    parties.
  • Do not arrange or participate in any fictitious transactions in which no transfer of the securities or
    funds occur.
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16
Q

What are the potential penalties for a Licensed Broker?

A
  • Warning.
  • Monetary fine not exceeding AED 100,000.
  • Encashment of the bank guarantee in part or in full.
  • Suspension of the broker from activity for a period not exceeding one week. If the period of suspension exceeds one week, the matter shall be referred to the SCA to take action as it sees fit.
  • Issue a recommendation to the SCA to remove the broker from the register of brokers licensed in
    the market.
17
Q

How can fines be appealed for Brokers?

A

Warnings and monetary fines can be appealed before the SCA within 30 days of notification. SCA’s decision is final

18
Q

When can a market suspend trading on a security?

A

In order to suspend trading, the majority of the members of the board must be present. The board can decide to suspend trading in exceptional circumstances or when circumstances arise that threaten the proper and regular
working of the market.

19
Q

What sanctions does a Market face if it doesnt pay its dues to SCA?

A
  • Warning
  • Notice to rectify – the SCA can serve a notice to the market to rectify within 30 (thirty) days of the date of the notice.
  • Penalty – the SCA can levy a penalty for delay of payment according to the following schedule:
    a. 1% of the amount during the first month;
    b. 2% of the amount during the second month;
    c. 5% of the amount in any subsequent months.
  • Suspension
20
Q

What happens if a company has price sensitive information?

A

Companies whose securities are listed need to immediately make any price sensitive information
available to the market. The board of directors of the market has the right to publish the information
provided in the local press and other media as appropriate.

21
Q

What is the Penalty for breach of Confidentiality?

A

Imprisonment and/or a maximum fine of AED 100,000

22
Q

What is the Penalty for Insider Trading?

A

Imprisonment between 3 months and 3 years
and/or
A fine between AED 100,000 and AED 1,000,000

23
Q

What is the Penalty for Unapproved or Undisclosed Trading by employees?

A

Imprisonment up to 3 years
and/or
A fine between AED 100,000 and AED 1,000,000

24
Q

SCA’s adminstrative arm includes which departments?

A
  • Licensing and Disclosure Department.
  • Follow-up and Inspection Department.
  • Systems and Information Department.
  • Administrative and Financial Affairs Department.
  • Legal Affairs Office.
25
Q

Market membership is mandatory for which entities?

A
  • Brokers licensed in accordance with the Law.
  • Joint stock companies whose securities are listed in the market.
  • Any other entity whose securities are listed in the market.
26
Q

What is the time frame for approval of market membership?

A
  • SCA will process within 15 days
  • Placed before the board within 30 days
  • Board decision notified within 1 week of decision
27
Q

How soon must a Market notify SCA of a new member entering the register?

A

Within 1 week

28
Q

What are the conditions to be approved as a Market?

A
  • A public institution or a public company.
  • Occupies an appropriate building fitted out with the technical equipment necessary to conduct its
    activity electronically.
  • It is electronically linked with the State’s other markets
29
Q

What is the timeframe for approving the license for a new Market?

A
  • SCA will process within 15 days
  • Board will take a decision within 30 days
  • Board decision notified within 1 week of decision

SCA Financial Rules & Regs (7 decks)

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