Securities and Commodities Authority Regulations
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Questions and Answers

What is the first action that can be taken when a financial requirement is violated?

  • Penalty
  • Warning (correct)
  • Notice to rectify
  • Suspension

How long does the market have to rectify the cause of the violation after receiving a notice?

  • 15 days
  • No specific time frame
  • 60 days
  • 30 days (correct)

What consideration is used when determining a penalty for delayed payment?

  • A part-month is considered as a full month (correct)
  • Only whole months are considered
  • Penalties are waived for part-month delays
  • No consideration is made for the timing of payments

What action may the SCA take regarding a market that has not paid fees?

<p>Temporarily suspending the market from operation (C)</p> Signup and view all the answers

What must listed companies do with price-sensitive information?

<p>Make it immediately available to the market (C)</p> Signup and view all the answers

Who has the authority to order investigations related to securities activities?

<p>The board of directors (D)</p> Signup and view all the answers

Which of the following actions is strictly prohibited when dealing with securities?

<p>Falsifying information to manipulate market value (A)</p> Signup and view all the answers

What happens to transactions executed in breach of disclosure provisions?

<p>They are null and void (A)</p> Signup and view all the answers

What is required before an employee of a listed company can buy or sell shares?

<p>Approval from the board of directors (C)</p> Signup and view all the answers

What happens to transactions that are not approved or disclosed by employees?

<p>They are null and void (D)</p> Signup and view all the answers

What does the Securities & Commodities Authority (SCA) primarily aim to regulate?

<p>Securities and commodities markets. (B)</p> Signup and view all the answers

Which of the following is NOT one of the strategic goals of the Securities & Commodities Authority?

<p>To increase international trade agreements (C)</p> Signup and view all the answers

What fundamental purpose does the Securities & Commodities Authority aim to serve?

<p>Provide a suitable climate for investment in securities and commodities (C)</p> Signup and view all the answers

Which of the following is NOT a focus of the SCA according to the Federal Law No. 4 of 2000?

<p>Environmental regulations for firms. (C)</p> Signup and view all the answers

What distinguishes the SCA in terms of its legal status?

<p>It is a separate legal personality with financial and administrative independence. (C)</p> Signup and view all the answers

What is NOT a consequence of spreading rumors regarding share transactions?

<p>Transaction becomes valid if disclosed later (C)</p> Signup and view all the answers

Who does the SCA report to?

<p>The Cabinet of Ministers. (C)</p> Signup and view all the answers

The Securities & Commodities Authority operates with which of the following characteristics?

<p>Public authority with legal personality and financial independence (A)</p> Signup and view all the answers

What legislative act established the SCA?

<p>Federal Law No. 4 of 2000. (C)</p> Signup and view all the answers

Which of the following best describes a duty of the Securities & Commodities Authority?

<p>Safeguard the rights of financial market investors (B)</p> Signup and view all the answers

What type of actions regarding share transactions are explicitly banned by policy?

<p>Spreading rumors about transactions (B)</p> Signup and view all the answers

Which of the following roles does the SCA NOT fulfill?

<p>Licensing of educational institutions. (D)</p> Signup and view all the answers

What is one of the key objectives of the SCA?

<p>Ensuring fair and transparent trading in securities. (A)</p> Signup and view all the answers

In which city is the SCA incorporated?

<p>Abu Dhabi. (C)</p> Signup and view all the answers

What is one of the primary responsibilities of the board regarding market activities?

<p>To report on the market’s activities to the Cabinet of Ministers (D)</p> Signup and view all the answers

What are the two main administrative roles within the SCA mentioned in the content?

<p>Undersecretary and Assistant Undersecretary (D)</p> Signup and view all the answers

What is required in relation to financial operations of the SCA?

<p>The SCA must keep regular books of account. (D)</p> Signup and view all the answers

Which of the following sources of income does NOT belong to the SCA?

<p>Advertising revenue from market events (D)</p> Signup and view all the answers

How frequently is the annual budget prepared by the chief executive?

<p>Once a year (D)</p> Signup and view all the answers

What is the duration of the fiscal year for the SCA?

<p>From January to December (C)</p> Signup and view all the answers

What role do auditors play within the SCA?

<p>They audit the financial statements of the SCA. (D)</p> Signup and view all the answers

Which of the following is NOT a duty of the SCA regarding market memberships?

<p>Setting membership fees for local businesses (C)</p> Signup and view all the answers

What is the minimum frequency at which the board must convene?

<p>Every two months (C)</p> Signup and view all the answers

Who presides over the meetings of the board?

<p>The chairman or their deputy (D)</p> Signup and view all the answers

What is required for the board to pass resolutions?

<p>Majority of the votes of those present (A)</p> Signup and view all the answers

In the event of an equal vote, who has the deciding vote?

<p>The chairman or their deputy (B)</p> Signup and view all the answers

Who may take the place of the chairman when they are absent?

<p>The deputy chairman (C)</p> Signup and view all the answers

Under which circumstance can the chairman make decisions without a board meeting?

<p>In exceptional cases requiring quick decisions (C)</p> Signup and view all the answers

What is not allowed regarding voting in board meetings?

<p>Voting by proxy (B), Voting by letter (D)</p> Signup and view all the answers

What role do experts outside the board play when invited to meetings?

<p>They provide experience and knowledge but do not vote (B)</p> Signup and view all the answers

Which of the following is NOT a financial activity included in 'custody, clearing and recording'?

<p>Underwriting securities (D)</p> Signup and view all the answers

What is the minimum paid-up capital requirement for credit rating agencies?

<p>AED 5 million (B)</p> Signup and view all the answers

Which entity must comply with the provisions of the Companies Law when operating in the financial free zone?

<p>Credit rating agencies (A)</p> Signup and view all the answers

What is one main function expected from the category of credit rating agencies?

<p>Category Manager or Official (A)</p> Signup and view all the answers

Which of the following statements is a requirement for credit rating agencies operating in the financial free zones?

<p>Must submit evidence of jurisdiction agreements with regulatory authorities (A)</p> Signup and view all the answers

What is a requirement for firms licensed to operate as credit rating agencies?

<p>Legal person or branch of a foreign company (D)</p> Signup and view all the answers

Which of the following is specifically NOT a role expected from credit rating agencies?

<p>Fund Manager (B)</p> Signup and view all the answers

Which jurisdiction is excluded for disputes based on licenses issued to credit rating agencies?

<p>Courts of the financial free zone (D)</p> Signup and view all the answers

Flashcards

What is the SCA and how was it established?

Federal Law No. 4 of 2000 established the Securities & Commodities Authority (SCA) in the UAE. The SCA is a public authority based in Abu Dhabi, with an independent legal personality, financial autonomy, and administrative independence.

What are the core functions of the SCA?

The SCA is responsible for overseeing and regulating the securities and commodities markets in the UAE, including issuing licenses, setting standards, and enforcing regulations.

What are the different organs of the SCA?

The SCA has specific organs, each with its own role in governing and managing the organization.

Explain the SCA's financial independence.

The SCA's financial independence allows it to operate without depending on government funds for its daily operations and decisions.

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To whom does the SCA report?

The SCA is accountable to the Cabinet of Ministers, the highest decision-making body in the UAE government.

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What is the primary purpose of the SCA?

The SCA's key objective is to create a stable and efficient financial market environment in the UAE by ensuring investor protection and market integrity.

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What is the role of the SCA in developing the UAE financial market?

The SCA is responsible for promoting the development of the securities and commodities markets in the UAE, creating a more attractive investment destination.

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How does the SCA ensure investor protection?

The SCA is mandated to protect the interests of investors, ensuring fairness and transparency in the market.

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Adequate Disclosure Rules

The responsibility of a market to ensure that any significant changes happening to a listed company are properly disclosed to the public.

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Transparency and Disclosure

The process of making information about a company's activities, finances, and risks available to the public.

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Membership and Trading Resolutions

Rules set by the SCA that determine who can become a member of a market and how securities and commodities are traded.

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Supporting the SCA's Objectives

Actions taken by the SCA to support the overall objectives of the Security and Commodities Authority.

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Annual Budget Preparation

The process of creating and approving the annual budget for the SCA.

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Sources of SCA Income

The different sources of funding for the SCA.

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Listing, Trading, and Service Fees

Fees charged by the SCA to companies listed on the market and brokers for services like listing, trading and annual membership.

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Fines for Violations

Penalties imposed on brokers and listed companies for violating regulations.

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Warning (SCA sanction)

A warning issued to the market indicating a specific financial requirement violation.

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Notice to Rectify (SCA sanction)

A notice given to the market to rectify a violation within 30 days.

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Penalty (SCA sanction)

A penalty levied by the SCA for delayed payments, calculated on a per-month basis.

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Suspension (SCA sanction)

Temporary suspension of market operations, imposed until fees are paid.

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Public or Private Disclosure (SCA power)

The board may require entities involved in securities activities to publicly or privately disclose those activities and related information.

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Immediate Disclosure of Price-Sensitive Information (SCA requirement)

Listed companies must immediately release price-sensitive information to the market.

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Investigative Power (SCA function)

The SCA can investigate any matters related to the implementation of the law and its resolutions.

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Prohibition of Market Manipulation (SCA regulation)

It is illegal to manipulate market value or investor decisions by falsifying information.

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Who is the Chairman?

The board's leader, responsible for convening meetings, directing discussions, and issuing resolutions related to experts, consultants, and staff.

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What is the role of the Deputy Chairman?

The person who steps in for the chairman when they are absent or unable to perform their duties.

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How often does the board meet?

The board must meet at least every two months, or more often if necessary, at the chairman's request.

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How are board meetings announced?

The invitation to a board meeting must be sent in writing to all members, along with the agenda, in advance.

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What makes a board meeting valid?

A board meeting is valid if a majority of the members are present, including the chairman or their deputy.

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How are board decisions made?

Decisions are made by a majority vote. If the vote is tied, the chairman or their deputy has the deciding vote.

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What is the Chairman's role during a meeting?

The chairman directs the proceedings, maintains order during voting, and announces the results.

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What happens when quick decisions are needed?

In urgent situations, the chairman can make decisions without a full board meeting, but must present them to the board for approval later.

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What is the SCA?

The Securities & Commodities Authority (SCA) is a public authority responsible for regulating the financial markets in the UAE.

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What are the SCA's objectives?

Ensuring a fair and transparent market, protecting investors, and fostering a good environment for investment are some of the primary goals of the SCA.

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Is the SCA independent?

The SCA is independent from the government, having its own finances and administrative structure.

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What are the SCA's organs?

The SCA has various organs, each with specific responsibilities. These organs work together to achieve the authority's overall objectives.

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What are the rules for employees trading in listed companies?

Transparency in trading is crucial. Employees of listed companies need approval from the board of directors before buying or selling shares, and these transactions must be publicly disclosed.

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What are the SCA's strategic goals?

The SCA aims to enhance the legal framework, safeguard investors, promote transparency and good corporate governance, provide efficient services, and encourage innovation.

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What is the SCA's mission?

The SCA's mission is to protect investors, promote ethical practices, and create an attractive investment environment.

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To whom is the SCA accountable?

The SCA is accountable to the Cabinet of Ministers, the highest decision-making body in the UAE government.

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Main Functions of Credit Rating Agencies

The specific role that must be fulfilled by a credit rating agency, covering tasks like evaluating financial instruments and providing ratings.

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Capital Requirements for Credit Rating Agencies

The minimum capital required for a credit rating agency in the UAE, ensuring financial stability and credibility.

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Regulatory Compliance for Credit Rating Agencies

Credit rating agencies operating within the UAE should adhere to the regulations of the Securities and Commodities Authority (SCA) as well as their respective free zone's regulations.

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Legal Structure of Credit Rating Agencies

The legal structure required for credit rating agencies operating within the UAE, including foreign companies establishing branches or local incorporation.

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Free Zone Agreement for Credit Rating Agencies

Credit rating agencies operating from a free zone require approval and agreement with the free zone authority to ensure alignment with SCA regulations.

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SCA's Enforcement Power over Credit Rating Agencies

The SCA has the power to enforce regulations and impose penalties on credit rating agencies that violate their rules.

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Legal Structure of a Credit Rating Agency in the UAE

The SCA requires a credit rating agency operating in the UAE to have a legal structure within the country to ensure accountability and oversight.

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Professional Roles within Credit Rating Agencies

The SCA regulates the professional roles within credit rating agencies to ensure competence and standards are maintained.

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Study Notes

UAE Financial Rules and Regulations

  • This workbook relates to syllabus version 4.0 and will cover exams from 10 September 2023 to 20 May 2025
  • It is an educational workbook only and the Chartered Institute for Securities & Investment accepts no responsibility for persons undertaking trading or investments in whatever form.
  • While every effort has been made to ensure accuracy, no responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication can be accepted by the publisher or authors.
  • All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise without the prior permission of the copyright owner.
  • Any unauthorised act in relation to all or any part of the material in this publication may result in both a civil claim for damages and criminal prosecution.
  • The workbook contains a learning map, which includes the full syllabus, and the syllabus can be viewed at cisi.org, along with contact information for Customer Support.
  • The questions contained in the workbook are designed to aid revision and consolidation of learning, one chapter at a time.
  • Contains 100 examination-related questions

Chapter One: The Regulatory Infrastructure

  • Topics include:
    • Federal Law No. 4 of 2000
    • Securities & Commodities Authority (SCA)
    • SCA Resolutions
    • Corporate Governance
    • Codes of Conduct
    • License Categories and Requirements
    • Accounting System Controls
  • This syllabus covers approximately 11 of the 100 exam questions

Chapter Two: Licensed Bodies

  • Topics include:
    • General Provisions
    • Licensing Financial Activities
    • Further Licence Applicant Requirements
  • This syllabus covers approximately 14 of the 100 exam questions

Chapter Three: Investment Funds

  • Topics include:
    • Local Funds
    • Provisions Specific to Certain Public Investment Funds
    • Cash Investment Funds
    • Exchange-Traded Funds (ETFs)
    • Real Estate Funds
    • Evaluation of In-Kind Shares of Investment Funds
  • This syllabus covers approximately 15 of the 100 exam questions

Chapter Four: Markets

  • Topics include:
    • The Central Depository
    • Issuing and Offering Shares in Public Stock Companies
    • Troubled Public Joint-Stock Companies
    • Conciliation
    • Debt Securities
    • Islamic Securities
    • Derivatives
    • Crypto Assets
  • This syllabus covers approximately 14 of the 100 exam questions

Chapter Five: Anti-Money Laundering and Combating the Financing of Terrorism

  • Topics include:
    • Offences
    • The Role of the Financial Services Sector
    • Prohibitions
    • Politically Exposed Persons (PEPs)
    • Suspicious Transaction Reports (STRs)
    • Practical Measures
    • Record Keeping Requirements
    • Penalties
    • Market Abuse Regulations in the UAE
    • Conflicts of Interest Accepted Practice in the UAE
  • This syllabus covers approximately 14 of the 100 exam questions

Chapter Six: Client Protection

  • Topics include:
    • Suitability Standards
    • Appropriateness Standards
    • Client Assets Accepted Practice
    • Client Communications, Reporting, Financial Promotions and Advertising
    • Promoters and Introducers
    • Regulations for Special Purpose Acquisition Companies
  • This syllabus covers approximately 10 of the 100 exam questions

Chapter Seven: Trading

  • Topics include:
    • Abu Dhabi Securities Market (ADX)
    • Broker and Trading Rules of the ADX
    • Clearing, Depository and Registry Rules
    • Clearing in Commodities Markets
    • Dubai Gold & Commodities Exchange
  • This syllabus covers approximately 11 of the 100 exam questions

Chapter Eight: Dubai Financial Market (DFM)

  • Topics include:
    • Brokerage Firms
    • Rules of Securities Trading in the DFM
    • The Professional Code of Conduct (DFM)
    • Online Trading Regulations (DFM)
    • Order Types (DFM)
    • Order Handling (DFM)
  • This syllabus covers approximately 11 of the 100 exam questions

Glossary

  • Contains definitions for various financial terms and entities relevant to UAE financial regulations

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UAE Financial Rules and Regulations Edition 4, June 2023 PDF

Description

Test your knowledge on the regulations and procedures enforced by the Securities and Commodities Authority (SCA). This quiz covers various aspects including penalties, disclosures, and the strategic goals of the SCA. Assess your understanding of compliance in securities activities and related rules.

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