As part of its relentless efforts to enhance its oversight and supervisory system and to ensure the smooth functioning of financial markets in an attempt to develop and regulate the country’s securities sector, the Securities and Commodities Authority (SCA) reviewed and approved controls on trading regulated derivatives contracts on the Dubai Financial Market (DFM) pursuant to the SCA Board Chairman’s Decision No. (22/Chairman) Regulating Derivatives Contracts.

Derivatives contracts are issued as per the terms and conditions set down by the market. They are traded through a brokerage firm or a market maker authorized by the market to act as a derivatives member, subject to the conditions and obligations provided for in the approved controls.

Under such authorization, a derivatives member may enter into agreements with clients according to the orders they place in regulated derivatives contracts following their deposit of the initial margin amount (determined by the central counterparty) into their (derivatives contracts trading) account and their pledge to replenish that account immediately when the initial margin amount drops to the maintenance margin level (which represents the minimum initial margin level agreed upon between the client and the derivatives member, provided that it does not fall below that determined by the central counterparty).

The approved controls also included the actions taken by the market concerning such trades and the precautionary measures that it can institute to avoid hampering the normal course of work and to prevent violations of the regulations in place. It also contains the disclosures that must be made by the market.