“We are working to improve financial markets to raise their efficiency and prepare them for the new economic model,” bin Touq

The amendments are intended to:

• Enhance the governance of public joint stock companies.
• Regulate crypto asset issues and provide alternative sources of finance.
• Create new business growth opportunities by capitalizing on the Fourth Industrial Revolution technologies.
• Facilitate asset tracing and create a more transparent financial infrastructure.
• Remedy the situation of financially distressed public joint stock companies.
• Provide securities investors with new financial instruments.
• Develop new platforms by permitting free zone companies to be listed on financial markets.

His Excellency Abdulla bin Touq Al Marri, Minister of Economy and Chairman of the Securities and Commodities Authority (SCA), said that developing the legislative infrastructure has been a high-priority item on the SCA’s agenda to keep pace with the developments seen in the world’s financial markets as a result of the rapid technological advancements; to regulate, raise the efficiency, and enhance the competitiveness of the capital markets; to maintain investor rights; to create an environment attractive to capital from home and abroad; and to prepare domestic financial markets to meet the requirements for shifting to a new, more resilient and sustainable economic model.

Al Marri explained that the regulations and amendments introduced last year were primarily aimed at developing new capital market platforms, boosting digital transformation, and making markets more transparent and interconnected by capitalizing on the Fourth Industrial Revolution technologies, indicating that the decision the SCA issued at the end of last year to regulate crypto asset issues and offerings will help make a quantum leap in the performance of the capital markets operating in the country. It will also enhance access to capital, facilitate involvement with global markets, and create new investment opportunities.

New regulations

The achievements made by the SCA at the legislative and oversight levels in 2020 involved the introduction of five regulations, including:

•  Approving a guide to the governance of public joint stock companies under The SCA Board Chairman’s Decision No. 3 of 2020. The guide contributes to the development of an orderly, legal, clear, and effective framework to regulate the affairs of public joint stock companies, thereby ensuring the protection of the rights of all stakeholders and enhancing the regulatory role performed by the SCA. It is seen as a comprehensive regulation as it addresses institutional discipline standards and corporate governance, defines the responsibilities of the board of directors and the executive management more clearly, and ensures a sufficient degree of transparency and neutrality in capital markets.
  
  
•  Approving crypto asset regulations under The SCA Board Chairman’s Decision No. 23 of 2020. For the first time in the region, this decision allows for the regulation of crypto assets, including digital assets and security and commodity tokens on the one hand, and regulates the licensing of financial activities in connection with crypto assets, particularly exchanges, crowdfunding platforms, securities custodians, and other activities. The decision also aims to encourage innovation and competition, to provide alternative financing methods for institutions operating in the UAE, to protect investors dealing in crypto assets, and to combat money laundering and terrorism financing by facilitating asset tracing and creating a more transparent financial infrastructure, which helps create new business growth opportunities and allows for the best utilization of the Fourth Industrial Revolution technologies.
  
  
•  Adopting procedures for dealing with financially distressed public joint stock companies under The SCA Board Chairman’s Decision No. 13 of 2020 by creating an innovative method to handle suspended companies and setting up trading screens there, thus offering investors an additional opportunity to trade and dispose of the stocks of these companies. 

The SCA’s legislative system was further enhanced with the introduction of two other decisions concerning the fit and proper criteria and the common reporting standard. 

Amendment to nine prior decisionsIn

2020, the SCA approved amendments to nine regulations and decisions, including:

The SCA Board Chairman’s Decision No. (25) of 2020 amending provisions of The SCA Board Chairman’s Decision No. (11) of 2016 concerning issues and offerings of stocks of public joint stock companies.

The amendments provide securities investors with new financial instruments as they seek to set the stage for the launch of a platform for companies in free zones, thereby attracting more foreign investments by facilitating the access of free zone investors to the country’s financial markets and helping them expand their businesses and raise capital for their enterprises without having to go back to their country of origin, which will have positive implications for the economic cycle and growth.

The platform will be operated under the supervision of the SCA, which together with Dubai’s Supreme Legislation Committee coordinated efforts to draft and enact the legislation required for the launch of the project.

Eight other decisions were also amended, including those on Islamic securities issues and offerings, general clearing members, regulation of clearing operations in commodities markets, listing and trading commodities and commodity contracts, and the definition of qualified investors, in addition to changes to the fees owed to the SCA. 

Adoption of six pieces of legislation

The SCA adopted legislation in the past year for the Abu Dhabi Securities Exchange (ADX) and the Dubai Financial Market (DFM), including:

• Covered short selling.
  
  
• Securities lending and borrowing (amendments).
  
  
• Amendments to the violations list.
  
  
• Short-term trading controls.
  
  
• Amendment of the derivatives trading controls.
  
  
• The DFM violations list.

The SCA also provided 270 consultations and legal advice and introduced and revised 90 administrative decisions.