H.E. Sultan Al Mansoori calls for licensing new financial products and services in Arab markets

Transcription

1 H.E. Sultan Al Mansoori calls for licensing new financial products and services in Arab markets SCA News Professional Magazine - Issue No.13 - January 2015 In implementation of directives of H.H. Sheikh Mohammed bin Rashid Al Maktoum, H.E. Al Mansoori announces opening of trading on UAE s second market National companies raise foreign ownership 1 Awraq Maliyah percentage to go global Permitting founders to sell a share of their equity will encourage private companies to convert to PJSCs DGCX launches two new pairs of mini Indian Rupee Futures

2 H.E. Al Mansoori announces opening of trading on UAE s second market 2 Content SCA is among 30 best international practices 6 H.E. Al Mansoori calls for licensing new financial products and services in Arab markets 16 Cover H.E. Sultan Al Mansoori calls for licensing new financial products and services in Arab markets Professional Magazine - Issue No.13 - January 2015 In implementation of directives of H.H. Sheikh Mohammed bin Rashid Al Maktoum, H.E. Al Mansoori announces opening of trading on UAE s second market Permitting founders to sell a share of their equity will encourage private companies to convert to PJSCs 28 National companies raise foreign ownership percentage to go global Permitting founders to sell a share of their equity will encourage private companies to convert to PJSCs Second Edition DGCX launches two new pairs of mini Indian Rupee Futures Experts: Companies tendency to list shares on external markets is not feasible 30 UAE tops most active Middle Eastern countries in currency and commodity markets 32 National companies raise foreign ownership percentage to go global Professional magazine issued by the Securities and Commodities Authority Editing/Layout SCA Media & Communication Dept. Articles published in this magazine express the view of their owners and do not necessarily express the view of the magazine or the SCA. Neither the magazine s management nor the SCA bears any responsibilities for the articles. 34 ش هادة الايزو 9001:2008 لنظم الجودة ISO 9001:2008 certified ش هادة الايزو 9001:2008 لنظم الجودة ISO 9001:2008 certified جاءزتي برنامج الش يخ خليفة للتميز الهكومي Sheikh Khalifa Government Excellence Awards يخ خليفة للتميز الهكومي Sheikh Khalifa Government E Awraq Maliyah 1

3 SCA Cover News Story In implementation of directives of H.H. Sheikh Mohammed bin Rashid Al Maktoum, H.E. Al Mansoori announces opening of trading on UAE s second market H.E. Sultan Al Mansoori: the market is another source of revenue for national economy as it offers more options to investors H.E. Al-Turifi: three companies join the second market and five initial public offerings (IPOs) in the next year t t H.E. Eng. Sultan bin Saeed Al Mansoori, Minister of Economy and Board Chairman of the Securities and Commodities Authority (SCA), has announced the opening of trading on the UAE second market, in implementation of the directives of H.H. Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai, who launched the market last September. Flanked by H.E. Abdullah Al-Turifi, SCA Chief Executive Officer, Essa Kazim, Board Chairman of Dubai Financial Market (DFM), Abdul Aziz Al Neaimi, Assistant CEO of Abu Dhabi Stock Exchange (ADX) and officials of private joint-stock companies listed on the market, H.E. Al Mansoori signaled for the beginning of trading in stocks of private joint-stock companies listed on the second market after delivering the opening address of the First Arab Capital Markets Conference. Also in attendance were the Chairman of Union of Arab Securities Authorities (UASA), UASA Secretary General and representatives of 14 Arab securities market regulators. H.E. Al Mansoori disclosed that some private joint-stock companies have been listed on the second market and others will soon complete the listing process. He said the launching of the market is the fruit of coordination and series of meetings between the Ministry of Economy, the SCA, the ADX, the DFM and a number of private joint-stock companies, for trading on the second market to coincide with the UAE s celebration of its 43rd National Day. He pointed out that the companies listed on the second market are Manazel Real Estate and the National Investor. He said the new market will provide another important source of revenue for the national economy as it offers additional options to investors, side by side with the secondary market reserved for the trading of stocks of public joint-stock companies, adding that the new market will contribute to deepening local markets by providing additional investment options for shareholders. The new step reflects our deep recognition of the significance of both the public and the private joint-stock companies and the crucial role they play 2 Awraq Maliyah

4 in the economies of their countries by teaming up with the government to achieve sustainable development as the resources and experiences of those companies play vital roles in the development programs. Therefore, the good performance of these companies reflects the good performance of the national economy of a country in general, the SCA Board Chairman said, adding that the number of private jointstock companies registered in the UAE as at last January stood at 145 companies, with a total capital of AED131.3 billion. The Economy Minister said his ministry will be in charge of establishment, supervision, regulating and inspection of the private joint-stock companies in accordance with Federal Law No. (8) of 1984 Concerning Commercial Companies and its amendments, while the SCA will be responsible for supervising the implementation of the rules of the resolution. He expected the second market to play a vital role in creating the necessary environment for Small and Medium- Scale Enterprises (SMEs) to develop their operation and to provide a regional platform for listing counterpart companies from GCC member states and other Arab countries in the future, thus reflecting positively on the national economy. Also commenting on the development, H.E. Abdullah Al-Turifi said the idea of establishing a second market is to enable shareholders trade in stocks of private joint-stock companies in a well-organized form, expecting that five companies will be listed on the market over the course of 2015 and referring to discussions with three companies to join the market over the next period. He added that the second market will be in the form the AIM Market, which was established in the London Stock Market in 1995 and consisted of private joint-stock companies. He pointed out that the market is also open for listing of companies from various countries, particularly from the GCC States. He said the opening of the market aims at providing opportunities for companies looking for finance to expand and grow in business. Therefore, it will billion dirhams is the capital of 145 private joint-stock companies in the UAE provide a new source of investment in the UAE in parallel with the main market for trading of stocks of public joint-stock companies. Citing the benefits of the new market, Al-Turifi said it will provide opportunity for shareholders of private joint-stock companies to trade in their name to achieve profits instead of having to wait only for the annual dividend distribution. The new market will also spur private companies, including family companies, to gradually convert to joint-stock companies, thus reflecting positively on the primary and secondary markets Anyway, having a market for trading of stocks of private companies will also help them get the necessary funding for executing their projects and will facilitate their banking transactions in the country, Al-Turifi said. He added that establishing a market for private joint-stock companies will help solve many problems of trading in their shares as in the current situation particularly the transfer of share ownership through courts and notaries and the lack of clarity in the fair price of shares. He said there is no conflict between the rules of listing and trading on the new market and those of the ADX and the DFM. Every market has its own listing requirements. The same rules of trading, clearance, settlement, ownership transfer and securities custody being implemented on the ADX and the DFM shall apply on the second market, although due to the nature of the second market, being for only private companies, it will not be subjected to some rules and conditions, like having a minimum capital requirement, he said. SCA considers introducing a legislation compelling companies traded outside the markets to join the regular market after being given notice Dear investor, Base your buy or sell decisions on your follow-up of companies performance and growth potential by reviewing financial statements, budgets, and profit and loss accounts. Make use of periodic disclosures and financial reports published by public joint-stock companies or turn to financial consultantsfor technical analysis of stocks. Awraq Maliyah 3

5 SCA Cover News Story Boosting diversification efforts of market investment instruments, Second market is an added value to markets operation The inauguration of the second market, a new platform to trade the shares of privatejoint stock companies in the United Arab Emirates, would be an added value to financial markets operation during the next phase as it provides an investment channel that would be, according to many experts, a tipping point in the operation of markets that have become the most active, regionally and internationally. 145 private companies These experts valued the tremendous efforts made by the Securities and Commodities Authority (SCA) in this regard and culminated in the recent issuance of the Regulation of Listing and Trading of Shares of Private Joint-Stock Companies last April. Experts said that the regulation keeps pace with the best international practices and clearly states the conditions under which private joint-stock companies would be able to list their shares on the market, including the requirement that the capital be paid in full, that the audited budget be issued for the last two fiscal years and that the company facilitate the trading of its shares through brokerage companies licensed by SCA. Following SCA approval, the market determines share pricing mechanism once shares have been listed, trading hours, and the amount of share price movements, in addition to the regulations, mechanisms and technical procedures necessary for trading the shares. For its part, SCA shall provide supervision and inspections and shall take all actions necessary to ensure the implementation of the regulation without violating the powers The latest report released by the Ministry of Economy showed that the total number of private joint-stock companies registered in the UAE and operating across all emirates reached 145 as at last January, with a total capital of AED131.3 billion, which is a strong indicator that the business environment is highly potential and successful. According to the report, although Dubai alone accounts for 71.7% of the total capital registered in the country, worth AED95.7 billion, of which AED93.5 billion has been paid capital, Abu Dhabi comes first in the number of companies, accounting for 57% of the total companies registered, and second in capital, with a total capital of AED32.4 billion, of which AED27.8 billion has been paid capital. The report pointed out that the number of private joint-stock companies registered in Dubai reached 45 companies, seven of which are operating in the real estate sector, accounting for 89% of the total capital registered in the emirate and 63.7% of the total capital of private joint-stock companies registered in the country, worth AED83.5 billion. The investment sector comes second in the emirate, accounting for 5% of the total capital registered, worth AED5 billion and with a total of 17 companies, followed by the finance sector, which accounts for 3%, worth AED3.3 billion and with a total of nine companies, then the services sector, which accounts for 1%, and finally the electricity, water, communications and industry, which all account for 0.1%. invested in the Ministry of Economy and the relevant authority. According to the official statistics announced by the Abu Dhabi Securities Exchange (ADX) and the Dubai Financial Market (DFM), more than 10 private jointstock companies are eligible to have their shares traded on the parallel market. According to Essa Kazim, DFM Board Chairman, the market has long been providing private joint-stock companies with many services similar to those provided to public joint-stock companies. Thus, the introduction of a mechanism for private joint-stock companies share trading would not make much of a difference, whether in the nature of market services provided or the trading of these companies shares by the e-trading system. Kazim added that the listing includes all companies classified as private under specific conditions, pointing out that the idea behind founding a market for the trading of these companies shares was primarily to allow for organized share trading among shareholders, which contributes to the diversification of investment instruments in the UAE financial markets. He said that the market sent letters to over 60 private joint-stock companies to invite them to make use of the register keeper services provided to this type of companies. Many positive reactions were received, which means that these companies are eligible to have their shares listed on the parallel market once founded, along with the shares of private joint-stock companies from the GCC and Arab states. For his part, Rashed Al Baloushi, ADX CEO, said that the market is ready to list private joint-stock companies shares, in terms of both infrastructure and technology, pointing out that six private joint-stock companies at least are eligible to be listed on the ADX following the launch of the market with the listing of Manazel Real Estate and the National Investor stocks. Al Baloushi pointed out that the market has sought, over the past period, to engage in dialogue with a large group of private joint-stock companies to exchange views on the listing of their shares on the parallel 4 Awraq Maliyah

6 market, which is seen as an added value to the UAE financial markets. Experts argued that launching a second market for private joint-stock companies share trading under specific mechanisms encourages these companies to subsequently convert into public ones, supports secondary market operation in general, and allows private joint-stock companies shareholders the opportunity to trade shares and generate profits instead of just waiting for annual dividends. According to financial expert Hossam Al Husseini, the Regulation of Listing and Trading of Shares of Private Joint-Stock Companies is seen as a new achievement that contributes to deepening the UAE financial markets, pointing out that the listing of these companies shares is optional, not compulsory, given that it requires specific levels of disclosure from companies that will have their shares traded on the new market. Al Husseini stressed that founding the second market will address many problems facing private joint-stock companies share trading, especially the transfer of share ownership certificates through courts and notaries and the ambiguity of fair share prices, in addition to resolving all problems being encountered by investors in these companies. He said: Everyone knows that the past ten years contributed to the emergence of private joint-stock companies with a large number of shareholders, exceeding thousands in some. As a result, even though such joint-stock companies are private in legal form, they are similar to public joint-stock companies in practice, adding that these companies are more likely than others to convert into public ones, accordingly. Al Husseini argued that what is good about the new draft law of public jointstock companies is that the legislator included a provision that permits private joint-stock companies wanting to convert into public ones to sell up to 30% of their shares in an initial public offering instead of the old provision that requires the addition of 55% to these companies capital prior to the conversion, a condition which has been a burden that prevented them from converting into public ones and even pushed some towards external markets. This has also prevented the national economy from capitalizing on the conversion as anticipated. Private companies listing fees According to the regulation issued by the SCA Board, private companies listing fees are: AED30,000 levied on private joint-stock companies with a total capital of AED500 million, AED50,000 levied on companies whose capital ranges between AED500 million and AED2 billion, and AED100,000 levied on companies whose Private companies register capital is over AED2 billion. Both SCA and the market concerned collect the specified fees. The listing lasts for one year, ending on 31 December of each year. However, first listing starts following SCA approval and lasts until the end of December of the same year and fees, in this case, are calculated on the basis of the remainder of the year, but fees charged for part of a month shall be full chargeable fee as for a whole month. Among the services being provided by the ADX and the DFM is the registerkeeping of private joint-stock companies shares, a move that many analysts believe supports the idea of launching a market to trade these companies shares, encourages other companies to join this market, and contributes to turning privatejoint stock companies into public ones later. Launching a market to trade private joint-stock companies shares helps these companies to receive funds necessary to finance their projects, facilitate their business with the banking system in the country, develop their operating style, and adopt good governance. The DFM offers a distinctive set of services to joint-stock companies in general, both private and public, including the register-keeping service. So far, four private joint-stock companies have mandated the market to run their shareholders register, namely Al-Madaen Real Estate, Mawarid Finance, Awtad Investment, and Al-Mal Capital. Awraq Maliyah 5

7 SCA News H.E.Sultan Bin Saeed Al Mansoori chairs the first meeting of the fifth session board Board reviews report on SCA s most significant performance indicators of 2014 in light of its strategic plan SCA is among 30 best international practices The Board of Directors of the Securities and Commodities Authority (SCA) held its first meeting (of the fifth session of the Board) at the SCA Dubai branch under the chairmanship of H.E. Eng. Sultan Bin Saeed Al Mansoori, Minister of Economy and Board Chairman. The meeting included new board members: H.E. Mohammad bin Ali bin Zayed Al Falasi, H.E. Humaid Ali bin Butti Al Muhairi, H.E.Abdullah Ahmad Khalifa Al Suwaidi, H.E. Hilal Khalfan Bin Dhaher Al Muhairi, H.E. Al Yaziya Ali Saleh Al Kuwaiti, and H.E. Abdullah Al Turifi, SCA CEO. The meeting was also attended by H.E.Maryam Al Suwaidi, Deputy CEO for Licensing, Supervision, and Enforcement, and H.E. Dr. Obaid Al Zaabi, Deputy CEO for Legal Affairs and Issuance. At the beginning of the meeting, H.E. Mohammad bin Ali bin Zayed Al Falasi was elected Deputy Chairman, and members of the Executive Committee and Audit Committee were selected from Board members. The meeting also discussed and reviewed a number of important issues related to the securities industry as follows: Allocation account Given SCA s role in regulating and developing the operation of the UAE financial markets, SCA board approved the allocation account system for the purposes of energizing the market, diversifying market transactions, and increasing market liquidity. The board decision was made after reviewing the adopted international practices with respect to the consolidated accounts system, taking into consideration all relevant aspects and the results of implementing such system in the UAE markets. The implementation mechanisms and controls of the system adopted allow SCA and the markets to supervise the transactions processed and detect malpractices violating the rules and regulations. The allocation account system is a consolidated account produced by the market for the benefit of brokerage firms in At the legislative level: Markets legislative infrastructure has been bolstered through the issuance of a set of regulations and decisions and the amendment of others, including those relevant to: investment management covered warrants listing and trading of private-joint stock companies shares sukuk debt securities securities brokerage deposit certificates accordance with the approved procedures in this regard. It is an optional account allocated for the trades of institutional investors only. Brokerage firms would trade in favor of their institutional clients only through this account according to their orders. At the end of the trading session, the brokerage firms shall distribute all the shares that were purchased through the allocation account to investors accounts registered at the clearing house. For the purposes of system implementation, it was decided to amend both Article No. (35) of the Board of Directors Decision No. 6 Awraq Maliyah

8 (3) of 2001 concerning the Regulations as to the Functioning of the Market and Article (5) of the Board of Directors Decision No. (2) of 2001 concerning the Regulations as to Trading, Clearing, Settlement, Transfer of Ownership and Custody of Securities so that such amendment permits trading according to the allocation account system, while the market has the power to set the necessary controls and procedures for system implementation, provided that the marketsadopt system controls after the SCA approval. Furthermore, the board reviewed SCA s efforts in promoting primary market activity and approved the incorporation and offering of a number of public joint-stock companies. SCA achievements report The board also reviewed a report on SCA achievements over the course of 2014, most notably: At the regulatory level: As part of its regulatory role, SCA s achievements can be summed up as follows: His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President, Prime Minister, and Ruler of Dubai (may Allah protect him) launched the second market in the UAE financial markets and opened it for trading following the listing of shares of two private joint-stock companies on the Abu Dhabi Securities Exchange (ADX). The UAE ranked first for effective corporate boards, according to the annual World Competitiveness Yearbook released by the Swiss-based International Institute for Management Development (IMD). The UAE topped Arab and Middle Eastern countries on the investor protection index and leapt 59 ranks internationally, making the list of the ten most improved economies across the world, according to the World Bank s annual report. The UAE IPO market witnessed remarkable activity and rebounded with a new wave of initial public offerings in four companies, which have been registered and listed on the financial market: Marka, Amanat Holdings, Emaar Malls Groups, and Dubai Parks and Resorts. Two other companies were registered in the second market: Manazel Real Estate and the Organizational and supporting services: SCA s Organizational and Supporting Services Sector had numerous achievements, notably: 1. At the International Best Practice Competition, SCA was selected among the 30 best international practices in human resources (executive leadership qualification program), internal audit(automation of internal audit system and its linkage to risks and corporate governance), and strategy (integration and linkage of strategic management system to performance appraisal system). 2. SCA electronically transformed 41 services provided to investors, public jointstock companies, brokerage companies, custodian companies, financial consultancy and financial analysis companies, and the registrar keeper of private joint-stock companies. 3. In response to the directives of the wise leadership to provide investors with effort- and time-saving services, SCA launched its smart devices application available on Apple, Android, Blackberry, and Windows, with a total of 11 services informative and procedural to process transactions round the clock from anywhere. 4. SCA won two awards at the MENA HR Excellence Awards ceremony, namely Distinction in Healthy Workplace Strategies Corporate Wellness and HR Professional of the Year Public Sector. 5. SCA organized its Sixth Annual Conference under the title Global Standards The Pathway to Deep and Liquid Markets, which was attended by an elite group of experts and specialists from across the world, and co-organized another titled the First Arab Capital Markets Conference in cooperation with the Union of Arab Securities Authorities (UASA). 6. SCA co-inaugurated the stock market virtual screen at the UAE University. 7. SCA signed an MoU with the UAE Ministry of Interior on service quality, corporate excellence, and training. 8. SCA signed an MoU with the Paris-Sorbonne University Abu Dhabi to develop human resources in financial markets sector. National Investor. Rights issues have been traded for the first time in the capital increase of Eshraq Properties. The National Bank of Abu Dhabi (NBAD) became the first licensed market maker in the UAE. A number of new financial services companies were licensed: - 13 companies to practice margin trading activities. -9 new brokerage companies to conduct The UAE ranked first for effective corporate boards and topped Arab and Middle Eastern countries on the investor protection index Direct Market Access (DMA). -7 companies to practice financial consultancy and financial analysis activities. -3 companies to practice commodities trading activities. -1 company to practice own-account trading activities. Approval was given to the: - incorporation of 2 local mutual funds, with a total asset value of over a billion dirhams. - registration of 2 local mutual funds. - promotion of 47 foreign mutual funds inside the UAE. The implementation of the Extensible Business Reporting Language (XBRL) became mandatory for public joint-stock companies. The SCA Training Center (SCATC) qualified a record number of 107 graduates, who completed the brokers professional qualification program. Awraq Maliyah 7

9 SCA News Cooperation between SCA and CIBAFI The Securities and Commodities Authority (SCA) and the Bahrainbased General Council for Islamic Banks and Financial Institutions (CIBAFI) signed a memorandum of understanding (MoU) on cooperation between the two parties, by utilizing the qualification and training programs provided by each party to the other in order to ensure the development of the UAE capital markets operation, thepromotion of financial activities and services, in general, and the improvement of the professional performance level of those working in this area, in particular. The MoU outlines the prospects of cooperation between the two parties in the exchange of expertise, studies and coordination between them with respect to qualification, training and education activities organized by the parties. The MoU also provides for proposing training programs for professionals in the field of financial services in order to develop and enhance their professional levels to acquire good knowledge on financial products and instruments traded in the financial marketsand to encourage continuous education and professional development in the field of financial services. Under the agreement, there will be an exchange of studies, research and publications carried out by each party in a manner not inconsistent with the regulations and policies of the other party. Each party shall give the other party s staff the opportunity to benefit and participate in its activities, events, courses and conferences. SCA and SIDC sign MoU on training, research, and sharing of experience H.E. Abdullah Al-Turifi exchanges documents with Ranjit Ajit Singh in the presence of the Malaysian prime minister Najib Razak The Securities and Commodities Authority (SCA) and the Securities Industry Development Corporation (SIDC) of Malaysia have signed a memorandum of understanding (MoU) to boost joint cooperation by means of mutual benefit from orientation and training programs of one another with the aim of developing financial markets and financial services industry, in general, and promoting the professional performance standards of those working in this field, in particular. Exchange of the MoU documents was made on the sidelines of the World Islamic Economic Forum, which was held under the auspices and presence of H.H. Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai and the presence of nine heads of states, including Najib Razak, the Malaysian prime minister. H.E. Abdullah Al-Turifi, SCA CEO, and Ranjit Ajit Singh, Executive Chairman of the Malaysian Securities Commission (SC), exchanged the MoU documents in the presence of the Malaysian prime minister. Also present were Mr. Azman Hisham Che Doi, SIDC Chief Executive Officer, and H.E. Dr. Obaid Al Zaabi, SCA s Deputy CEO for Legal Affairs and Issuance. In a post signing comment, H.E. Al- Turifi said: The signing of the agreement is within the framework of SCA s sustained efforts to provide appropriate investment environment for investors to protect their investments, boost the growth and diversity of national economy, sustain the stability, fairness and transparency of transactions on local markets and develop the level of skills and knowledge of persons and workers in those markets, in a way that would contribute to upgrading the level of financial services offered by our markets. He added: These efforts have positive implications manifested in the recognition by international financial institutions and organizations of the strength of the UAE securities markets infrastructure, in terms of regulation and supervision, having become a major destination for corporate investors and financial service providers in the region, especially after the UAE market has been upgraded to emerging market status by international rating agencies. H.E. Al-Turifi praised the Securities Commission of Malaysia and its affiliates for their distinct expertise and successful experience, citing the need to make use of those experiences in view of the common factors and similarities between the two countries emerging markets. 8 Awraq Maliyah

10 SCA signs MoC with CMA of Kuwait On the sidelines of the meetings of the third session of the UAE-Kuwaiti Joint Committee in Abu Dhabi, a memorandum of understanding (MoU) was signed between the Securities and Commodities Authority (SCA) of the UAE and the Capital Markets Authority (CMA) of Kuwait. The MoU was signed for SCA by H.E. Abdullah Salem Al-Turifi, SCA CEO, and for the CMA by H.E. Dr. Nayef Falah Mubarak Al-Hajraf, Chairman of the Board of Commissioners of CMA. The primary purpose of the MoU is to provide greater protection for investors and to ensure the efficiency of the securities markets through a framework that sets the means of cooperation, mutual understanding, and exchange of information in accordance with the limits allowed by the laws and regulations. The scope of work for this MoU includes the provision of assistance in detecting and taking action against insider-trading cases, market manipulations, and other forms of fraud in securities transactions, as well as assistance with respect to companies, securities, futures, options and investment activities. It also includes: (1) the enforcement of laws, rules, and regulations relevant to securities trading, future options, and collective investments and the regulation of such activities; (2) oversight and control of stock markets, clearing and settlement operations; (3) ensuring the qualification and efficiency of licensees by improving their professional level in order to ensure the integrity of transactions and efficiency of professional performance; (4) ensuring that the issuers of securities offerings, board members, heads of companies, shareholders, and professional advisors of listed companies, or those of companies wishing to be listed on markets of both authorities, are in compliance with all the obligations stipulated in the laws and regulations; and (5) the enforcement of laws, rules, and regulations relevant to issuances and transactions, arranging deals, business management and consultancy relating to securities, mergers, and acquisitions. Capital markets annual conference at GCC countries The Ministerial Committee of Board Chairmen of the Financial Markets Regulators in the Gulf Cooperation Council (GCC) states agreed to hold an annual conference that brings together all active parties in the GCC capital markets hosted by the presiding country, in addition to holding a coordination meeting concurrently with the regional and international meetings that the GCC countries participate in to unify their positions in international forums, subject to coordination between the presiding state and the General Secretariat (if necessary) to do so. The Committee also decided, during its fifth meeting held in Kuwait recently, to invite the working group of officials in charge of training in financial markets regulators in the GCC countries to hold an annual meeting to promote and develop cooperation and integration in the areas of training and exchange of expertise for financial market professionals. The Committee approved the MoU signed between the GCC financial market regulators, as per its attached draft in the meeting, after reviewing minutes of the fourth meeting of the Ministerial Committee of Board Chairmen of the Financial Markets Regulators in the GCC countries held in October of 2013, and the recommendations made on the MoU between the GCC financial market regulators and the memo of the Secretariat General in this regard. The Committee also perused the report of the General Secretariat on the unified rules and principles for financial markets integration and the unified rules and principles agreed-upon and approved by the Supreme Council, namely: (1) the unified rules for listing stocks in the GCC financial markets; (2) the unified rules for listing bonds and Sukuk in financial markets; (3) the unified rules for listing mutual funds units in financial markets; (4) the unified rules for the disclosure of securities listed on financial markets; (5) the unified principles of governance of listed companies in the GCC financial markets; (6) the unified rules to offer stocks in financial markets, which are the rules that have been agreed to be applied as guidelines for a period expiring by the end of 2014; (7) the unified rules for the issuance and offering of bonds and Sukuk in the GCC financial markets; (8) the unified rules for the issuance and offering of mutual funds units in the GCC financial markets; (9) and the draft unified rules for the supervision and oversight of trading in financial markets, approved as guidelines for a period expiring by the end of The Committee agreed to make a recommendation to the Ministerial Council to address the Supreme Council to approve the continuation of the unified rules to offer stocks in the GCC financial markets, which have already been adopted by the Council as guidelines until the completion of the platform of unified rules for the full integration of financial markets and ensuring their harmony and compatibility with each other, provided that a legal team from the GCC countries is formed to review all of the unified rules and make sure that they are consistent and harmonized, and then submit them to the Committee of Heads of Financial Markets bodies (or their equivalents) in the GCC states, as well as instructing the team to quickly finalize the unified rules for the integration of the GCC financial markets. The Ministerial Committee stressed the importance of holding a joint annual meeting between the Committee of Governors of Monetary Agencies, the Central Banks and the Committee of Ministers of Chairmen of the Financial Markets Regulators to exchange views with respect to regulatory aspects governing financial markets and commercial banks, as well as the importance of continuous coordination between the regulators in subjects of financial integration in the GCC countries. The GCC General Secretariat shall present the subject to the Committee of Governors of Monetary Agencies and the Central Banks in the GCC countries at their next meeting in order to arrange for a joint meeting as from the year Awraq Maliyah 9

11 SCA News Called for adopting Arabic as official language in IOSCO meetings UAE launches initiative to promote Arab capital markets performance The Securities and Commodities Authority (SCA) has presented an initiative aimed at improving the performance of financial market regulators in the Arab region and enhancing the role of the International Organization for Securities Commissions (IOSCO) in the sharing of experience and knowledge among member states. A number of important financial services issues have been lined up on the agenda meeting, which will also discuss other matters related to securities and capital market regulators. SCA initiative aims at developing IOSCO s practical performance in financial services industry of the Arab region The UAE delegation participated in the conference s preliminary sessions and preparation meetings including the meeting of the Africa and Middle East Committee. IOSCO s strategic programs, including President s Committee Resolution on Capacity Building for Emerging Markets, latest developments on the signing of IOSCO Multi-lateral Memorandum of Understanding (MMoU) by members who are yet to sign, ways to deepen and enhance emerging markets, are also being discussed at the meetings. The delegation also participated in the Growth and Emerging Markets (GEM) Committee meeting which discussed Financing for Small and Medium Scale Enterprises (SMEs) through capital markets, Market-based long term financing solutions for SMEs and infrastructure and IOSCO- World Bank development of mutual funds in emerging markets. The meeting also discussed recommendations for decisionmakers regarding the appropriate reforms and best practices for development of mutual funds in emerging markets, emerging markets from an investment perspective and other financial market related issues and challenges facing regulators. Heads and representatives of Arab market regulators members of IOSCO held a consultation meeting upon invitation from the SCA to discuss issues of great interest. In a statement regarding the meeting, Al- Turifi said the meeting aimed at consultation coordination among members in activation of IOSCO s charter regarding UAE s initiative which seeks to enhance IOSCO s role on the ground in the area of financial services industry, particularly in the Arab region. He added that the most significant points in the initiative are: Supporting the capacity and capabilities of IOSCO members from the MENA region to enable them proactively participate in the sharing and transfer of knowledge related to financial market legislations and enhancing the role in the areas of supervision, regulation and enforcement, it is recommended that IOSCO should make frequently practical recommendations and guidelines that can be used by members to enable them cope with any financial crisis they may face. In this regard, bilateral projects also need to be developed based on gap analysis to be done for each requesting jurisdiction. To enhance the outputs of groups and taskforces, it is recommended that there should be a shift from the theoretical and descriptive approach such as reading of progress reports to a more applied and case study approach in order to help IOSCO members share experience and outputs. The need to introduce on-site training programs that would be funded partially by the IOSCO. To officially apply for IOSCO to add Arabic to its official languages, as in the case at the United Nations, the world Bank and the International Monetary Fund. 10 Awraq Maliyah

12 As part of the plans to make the UAE an international financial services hub, Strong incentives to found active bonds and sukuk market in the UAE H.E. Abdullah Al-Turifi, Chief Executive Officer of the Securities and Commodities Authority (SCA), confirmed that, based on the vision and strategies of SCA, the UAE markets already have a clear advantage with many incentives already in place including a strong regulatory structure, adding that SCA regulations aim to follow best international practices and cutting edge market standards with the goal of modernizing the country s financial markets. Al-Turifi made the statement in an opening address, read on his behalf by Dr. Obaid Al Zaabi, Deputy CEO for Legal Affairs and Issuance, at the two-day roadshow held in both Abu Dhabi and Dubai to highlight the significance of the bonds and sukuk market in light of the new regulations for Bonds and Sukuk. The event seeks to give momentum to the UAE bond and sukuk market, raise awareness of sukuk among potential issuers and investors, promoting UAE s role as a financial hub and home of global Islamic economy, demonstrate SCA s commitment to greater transparency and market efficiency and to create a positive and compelling story about new tools of UAE financial markets. These two regulations are part of a move to promote the UAE as a hub for finance services and bolster the local debt markets as an important component of financial markets, he added. Highlighting the two new regulations further, Al-Turifi said: The growth of the international and local bond market brings to investors more options for diversification of their investments and offers investors the benefits of wide spectrum of attractive returns bonds. The total size of bond and Sukuk issuances in the UAE alone during the first half of the year exceeded AED44.2 billion, constituting almost 55% of total issuances in the Middle East region during this period, according to international reports. Furthermore, he stated that in the first half of 2014, the total Sukuk issuances in the GCC grew by 19% compared with 44.2 billion dirhams is the total volume of bond and sukuk issuances in the UAE in the first half of million dollars is the value of Sharjah s ten-year debut sukuk program 6% in Malaysia, according to Standard & Poor s. The emirate of Sharjah last week launched its ten-year debut sukuk at a size of US$750 million. Dr. Munther Barakat, SCA Senior Advisor on Research, delivered the SCA All companies listed on local markets are under the regulations as to the issuance of bonds and sukuk presentation in which he highlighted the new UAE Bond and Sukuk Regulations. He started with the scope of the regulations, saying that the regulations apply to the issuance of Bonds and Sukuk in the country or to listing such Bonds and Sukuk in the market. He said government Bonds and Sukuk are excluded. However, listing and trading regulations apply if listed, adding that Bonds and Sukuk offered through a public subscription must be approved by the SCA and must be listed on the market. Referring to the issuance and listing conditions, Dr. Barakat said for primary listing of Bonds and Sukuk issued by joint-stock companies, the issuer must be incorporated in the UAE and outside the financial free zones. Issuers and issues must comply with the provisions of the Commercial Companies Law and with the Issuer s Constitutional Documents. And unless SCA decides otherwise, the minimum value of an issue is AED10 million, he stated, adding that a trustee must be appointed to represent the interests of the holders of such Bonds and Sukuk. He cited the conditions and procedures for approval as including approval of the issuers general assembly, a prospectus according to a form to be approved by SCA. If the Bonds and Sukuk are convertible, the Prospectus must include details of the conversion, Bonds and Sukuk issuance programs are allowable and that the work of Paying Agent in the UAE can be performed by the trustee. Omar Saleh Al-Sarkal, Surveillance Specialist at the ADX Market Operation and Surveillance Department, highlighted the technical aspects of bonds and sukuk, while Khalifa Rabba, Deputy Head of Operations Division at the DFM, also delivered his presentation. Mr. Michael Griffey, President of the GBSA, expressed his outfit s delight in partnering the SCA to help roll out new and improved regulation to govern the issuance, listing and trading of bonds in country. Awraq Maliyah 11

13 SCA News SCA celebrates 43rd National Day The Securities and Commodities Authority (SCA) celebrated the UAE s 43rd National Day in a ceremony held at its Abu Dhabi main office and Dubai branch office in the presence of H.E. Salem Al-Turifi, SCA CEO, CEO deputies, department directors and all SCA employees. H.E. Al-Turifi opened the ceremony also attended by the Secretary-General of the Union of Arab Securities Authorities (UASA), Jalil Tarif and delivered a speech that shed light on the reality of the country and the prominent place it now occupies among the most advanced countries in the world. On this occasion, H.E. Al-Turifi extended his deepest congratulations and best wishes to President His Highness Shaikh Khalifa Bin Zayed Al Nahyan; His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice- President, Prime Minister and Ruler of Dubai; Their Highnesses Members of the Supreme Council, Rulers of the Emirates; and Crown Princes. In his speech, which marked the anniversary of the establishment of the union, H.E. Al-Turifi paid tribute to the country s founding fathers and recalled the virtues of the late Shaikh Zayed Bin Sultan Al Nahyan, the founding father of the UAE, and the late Shaikh Rashid bin Saeed Al Maktoum. H.E. Al-Turifi noted that the UAE has made considerable achievements and progress as indicated by global indexes and competitiveness reports, adding that the national service program is a significant initiative for UAE nationals to express their loyalty, belonging and gratitude. SCA held its ceremony at the park opposite to its Abu Dhabi main office and at the auditorium at its Dubai branch office. The festivities included showing a documentary on the instrumental role of the late Shaikh Zayed Bin Sultan Al Nahyan in laying the foundations of the union, along with traditional and cultural presentations and dances as well as live presentations of falconry, pearl fishery, and palm tree climbing. Both SCA s Abu Dhabi main office and Dubai branch office have been decorated with flags and Spirit of the Union stickers. A traditional tent was also put up where traditional food and symbolic gifts were given to attendees. 12 Awraq Maliyah

14 In response to the noble call by H.H. Sheikh Mohammed bin Rashid Al Maktoum SCA participates in Flag Day anniversary H.E. Abdullah Al-Turifi: UAE flag reflects leadership, honor and pride of our young nation H.E. Abdullah Al-Turifi, CEO of the Securities and Commodities Authority (SCA), raised the UAE flag on the SCA headquarters to mark the Accession Day anniversary of UAE President, H.H. Sheikh Khalifa bin Zayed Al-Nahyan to the throne of UAE presidency. The move comes also in response to the Flag Day initiative launched H.H. Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President, Prime Minister, and Ruler of Dubai. Commenting on the occasion, H.E. Abdullah Al- Turifi said: The initiative of raising the UAE flag on all buildings of ministries and institutions, in response to the call by H.H. Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President, Prime Minister, and Ruler of Dubai, strengthens the bond of unity between the UAE people and their leadership. We therefore seize this opportunity to rekindle our allegiance and loyalty to UAE President, H.H. Sheikh Khalifa bin Zayed Al-Nahyan, on the occasion of his Accession Day anniversary, which falls on November, 03, a date which represents a bright spot and one of the days of glory in the history of the United Arab Emirates. Al-Turifi added: The UAE flag reflects leadership, honor and pride of our young nation. On this occasion, our national flag flies high and aloft at the highest peak in the land of glory, honor and pride to stir up deep sense of belonging to the nation, enhance the concept of faithful citizenship, boost the sense of national identity, and deepen the spirit of loyalty to our generous nation the United Arab Emirates. Continuing further, Al-Turifi said: This occasion came to add more meaning to patriotism and national honor and pride to the record of a nation full of achievements, thanks to the wise leadership of the United Arab Emirates, who have fulfilled the promises they made to lead the country from grass to grace and from a nation at a level of founding and building to an advanced and prosperous nation. SCA CEO concluded by saying: We are inspired by this dear and memorable anniversary to uphold and rekindle our allegiance, loyalty and sense of belonging to the nation, its leadership and symbols. May Allah continue to protect the UAE leadership and people. May our national flag continue to fly higher and higher. May it remain deeply engraved in our heart and deeply rooted in our soul. May it remain the symbol of our unity and the source of our pride and honor. Awraq Maliyah 13

15 SCA News ADX and DoF launch first listing of government bonds The Abu Dhabi Securities Exchange (ADX) in association with the Abu Dhabi Department of Finance (DoF) launched today the first listing of government bonds in a step towards building a bond market operating under the best standards as with international financial markets. The listing solidifies the status of Abu Dhabi as a regional and global financial center, offering vast investment opportunities. ADX releases smart app Abu Dhabi Securities Exchange (ADX) has announced at GITEX 2014 the launch of its first smart mobile app. The Mobile Application provides investors with enhanced services and the opportunity to experience the latest technologies ADX offers with real-time quotes, news & announcements and tools that keep investors up-to-date with market activities. The launch of this new application is part of ADX s continuous efforts towards developing its services to accommodate customers needs and also towards making its investors trading activities more accessible. The new app provides a market summary on the Indices, and ADX s listed companies activities, as well as providing multiple watch lists to keep track of investors preferred stocks. The listing ceremony, which was held at the ADX main office, was attended by H.E. Mohammed Sultan Bin Ghannoum Al Hameli, DoF Executive Director, and Mr. Rashed Al Baloushi, ADX CEO, in the presence of senior staff from both sides and a group of investors. The total amount of bonds listed is US$1.5 billion, with a maturity date in The listing follows the approval of regulations by the Securities and Commodities Authority (SCA) for the issuance of local debt instruments and their listing on ADX. The Abu Dhabi Department of Finance announced last year its intention to dual list the bonds in ADX and the London Stock Exchange (LSE). Investors will be able to trade in the bonds in both LSE and ADX simultaneously. The adoption of these new regulations paves the way for new debt instruments to be listed and traded on ADX as their primary platform, which will help to create a more attractive and dynamic climate for investment in Abu Dhabi.The National Bank of Abu Dhabi (NBAD) will act as ADX s account operator. Settlement and clearing will take place via NBAD through ADX s participant account at Euro clear, which specializes in the settlement of securities transactions as well as the safekeeping and asset servicing of these securities. Investment in the bonds will be limited to Qualified Investor Buyers (QIB). On this occasion, H.E. Mohammed Sultan Bin Ghannoum Al Hameli stated: The dual listing of the bonds will help to enhance the investment exposure of the local markets and to reinforce Abu Dhabi s position as a regional and international financial center able to attract investment and provide investors with diverse options in the securities and bond markets. Abu Dhabi leads the economies of the Middle East in the field of credit rating. It also possesses the confidence of investors from across the world as it has preserved its ranking among the least risky economies in the credit markets as well as being the most capable of fulfilling its financial commitments in the past years. For his part, Rashed Al Baloushi, ADX CEO, said: Our ongoing efforts and strategic initiatives aim at reinforcing Abu Dhabi as a center of excellence in the region and enhance its leading position as a capital market hub. The ADX embraces international best practices to meet the evolving needs of its investors locally and internationally. He reiterated: boosting investment flows and institutional participation is one of the most important priorities of ADX in the next stage as they have a significant impact in attracting capital to Abu Dhabi and in promoting the emirate as a preferred destination for global investment. In addition, institutional investment plays an active role in stabilizing the financial markets and consequently the national economy. We hope that this dual listing will be followed by more similar listings. ADX introduces rights issue Abu Dhabi Securities Exchange (ADX) announced that it has started applying Rights Issue trading. ADX approved Eshraq Properties, listed on ADX under the ticker symbol ESHRAQ, capital increase through a rights issue of the amounts of AED600 million. The AED600 million-increase, representing 34.78%, will be divided on 600 million shares at par value AED 1 per share. Rights Issue allows a shareholder who does not want to or cannot subscribe for the share increase to sell his rights for financial benefit. 14 Awraq Maliyah

16 DFM signs two MoUs to promote depository and settlement and develop Smart Borse applications The Dubai Financial Market (DFM) has signed a memorandum of understanding (MoU) with Korea Securities Depository (KSD) and another with Raqmiyat and Kony to promote depository and settlement and develop Smart Borse applications. The MoU with the KSD aims to strengthen collaboration between both sides in the capital markets post-trade related businesses including exchange of information, developing new services, and establishment of operational linkage for enhancing efficiency of depository and settlement systems as well as making concerted efforts to contribute to the development of the international securities industry. The MoU creates a general framework for areas of joint cooperation and was signed by Maryam Fekri, Executive Vice President, Chief Operation Officer (COO), and Head of Clearing, Settlement and Depository at the DFM, and Dr. Jaehoon Yoo, Chairman and CEO of Korea Securities Depository (KSD), in the presence of senior officials from both sides, during the visit of the Korean depository delegation to the DFM. Developing Smart Borse applications The DFM signed another MoU with Raqmiyat and Kony with the aim to develop a series of applications as part of the exchange s strategy to fully implement the Smart Borse concept over the coming period. The signing ceremony took place at GITEX 2014 and the MoU was signed by Mr. Hassan Al Serkal, Chief Operating Officer (COO), on behalf of DFM, Mr. Tapas Roy, CEO of Raqmiyat, and Mr. Madhukar Joshi, Vice President Sales, Kony. The MoU creates a general framework that governs the collaboration amongst the three entities in regards to developing smart applications to serve various market participants which will include Business to Consumer (B2C) services mainly targeting investors, Business to Business (B2B) services such as services provided to listed companies, brokerage firms and custodians as well as Business to Employee (B2E) services. During GITEX, the DFM honored Total Technologies and Solutions, one of the technology partners of the exchange, for their active participation in developing the eipo platform, the sophisticated and efficient solution for online IPO subscription with direct connection to the receiving banks. Mr. Ali Al Hashimi, Executive Vice President and Head of Financial Services Division at the DFM, presented the trophy to Mr. Cecil Owens Chairman and CEO of the company. Furthermore, during GITEX, the DFM honored 7 of its licensed brokerage firms for providing a trading platform via smart phone applications, noting that the exchange closely cooperated with these companies enabling them to provide the service to its customers. The DFM actively encourages other brokerage firms to adopt the same route enabling investors to trade anytime and anywhere in line with its Smart Borse strategic approach. The list of honored brokerage firms included: Mubasher Financial Services, EFG-Hermes UAE Brokerage, Emirates NBD Securities, Al Ramz Capital L.L.C, Mena Corp Financial Services L.L.C, NBAD Securities and ADIB Securities. Mr. Hassan Al Serkal, Executive Vice President, Chief Operating Officer (COO), and Head of Operations Division at the DFM, presented the trophies to the senior representatives of the 7 companies. Trading via smart phone applications is steadily growing on the DFM given its total value reached AED2.6 billion in nine months and is poised to gain momentum over the coming period as more brokerage firms provide this service. 2.6 billion dirhams is the value of trading through the dfm Smart Borse application in 9 months Dear disclosure officer, Immediate disclosure of periodic financial statements and material decisions ensure transparency in financial markets where trust and reliability are highly sensitive andimportant. Remember that disclosure is the core of securities markets and essential in ensuring the fairness and safety of securities transactions. It is an important criteria to measure market efficiency and development. Awraq Maliyah 15

17 First SCA News Arab Capital Markets Conference At opening of First Arab Capital Markets Conference, H.E. Al Mansoori calls for licensing new financial products and services in Arab markets H.E. Eng. Sultan Al Mansoori, UAE Minister of Economy and Chairman of the Securities and Commodity Authority (SCA), called upon the Arab capital markets to adopt further modernizing mechanisms commensurate with the needs of investors and market conditions by licensing new financial products and services and issuing new legislations and regulations that meet market needs. In his keynote welcome speech before the First Arab Capital Markets Conference, held in Dubai in November 2014, Al Mansoori called for the introduction of new mechanisms and diversified technological services, stressing on the importance of activating the role of corporate governance, enhancing transparency and supporting disclosure mechanisms as well as adherence to compliance standards and law enforcement. Al Mansoori thanked the UASA General Secretariat, the Arab Monetary Fund, and Thomson Reuters for their distinguished efforts exerted on the organization of such promising conference, which was expected to reflect positively on the performance of UASA member authorities. Eight years ago, the UAE took the initiative of calling for a consultative meeting in Abu Dhabi to examine the means to establsih a union for Arab Securities Authorities to serve as a professional community and a pan Arab economic and business incubator. In a matter of a few months, the UASA was founded as a result of dedicated and sincere efforts aiming at boosting the legislative and regulatory level of the Arab securities markets through cooperation and coordination, at a time when we were and still in desperate need for joint teamwork in light of the challenges facing Arab capital markets, said Al Mansoori. He added that the conference was an opportunity to gain an insight on evaluation of the UASA s achievements, and the challenges facing the Arab securities sector, and at the same time, to envision the future prospects and have a peak at the expected role of the UASA and the target initiatives to be implemented within the ambitious plans set to boost its performance. Al Mansoori indicated that the theme of the conference raised many issues, on top of which was collaboration among the Arab securities authorities and exchange of information, which was a significant factor in market upgrade, in addition to reinforcing control over markets and their regulatory components, taking into account that the international transparency standards require streamlining of information among the supervisory authorities in the UAE 16 Awraq Maliyah

18 in order to provide such information to the competent foreign authorities upon request, while we emphasize the vital role of our financial markets in the Arab economies. According to the latest statistics of the Arab Monetary Fund regarding the performance of Arab financial markets, tradings of fourteen Arab financial markets amounted to nearly US$ billion since the start of 2014 up until the end of tradings on November 19. Further, the total stocks traded in such markets amounted to US$318 billion where such stocks were traded through million deals. The market value of such markets collectively recorded nearly US$1.320 trillion. H.E. Sultan bin Saeed Al Mansoori said: certainly, we live in the age of globalization and powerful economic blocs worldwide which requires maximum cooperation in order to overcome the challenges and difficulties faced by our joint work, on top of which, the varied legislative structures and different regulatory structures in the Arab stock markets and the difference in the listing and disclosure requirements, as well as procedures and systems of trading, settlement, and clearing adopted in the Arab markets, and lack of investment products and instruments, and financial services in addition to the relative short history of most of the Arab financial markets. He indicated that attaining of desired objectives toward improving performance of Arab financial markets, supervisory institutions and legislative and regulatory frameworks, and maintaining balance and stability in them require joint action to boost their attractiveness to investments, especially the inter-arab investments. According to the statistics included in the Investment Climate report issued by the Inter-Arab Investment Guarantee Corporation, the inter- Arab investments during 2001 and 2012 surpassed US$103 billion, while foreign investments in Arab nations amounted to US$766.9 billion in 2013, up from US$717.7 billion in Al Mansoori indicated that the Arab financial markets have significant potentials enabling them to compete internationally, and he called for adoption of more upgrading mechanisms that commensurate with the needs of investors and market conditions through licensing of new financial products and services, and issuance of legislations and regulations to meet the market needs in addition to introducing new mechanisms and variable technological services, while stressing the importance of activating the role of corporate governance, enhancing transparency and supporting disclosure mechanism as well as adherence to compliance standards and law enforcement. He added that the trusted reports released from the accredited studies centers and financial institutions such as Ernst & Young indicate that in 2013, twenty three IPO deals were recorded in the MENA with total proceeds of US$3 billion, rising by 64% in terms of volume and 51% in terms of value compared to We believe that the Morgan Stanley Capital International decision upgrading the rating of UAE and Qatar to emerging markets will boost investors turnout to this region, added Al Mansoori. He noted that the mutual fund industry, the most important market activity which It is important to bolster corporate governance, promote transparency, and strengthen reform mechanisms The UAE continues its ongoing support to the UASA activities Awraq Maliyah 17

19 First SCA News Arab Capital Markets Conference contributes in deepening of markets and increasing the percentage of institutional investment and liquidity, should have its share of attention by reinforcing disclosure in IPO prospectus and information notes concerning all matters related to investors and factors expected to affect their investment decisions. Al Mansoori said: in this regard it is enough to refer to the PWC report which unveils that operated assets amounted to approximately US$64 trillion by end of 2012 and they are expected to amount to nearly US$102 trillion by The UAE SCA took the initiative of calling for this conference since the early inception of the Union of Arab Securities Authorities to organize the conference entitled Arab Capital Market Conference under the umbrella of the UASA, to serve as a forum bringing together all financial institutions relevant with capital market such as the Arab securities markets, clearing and depository institutions, the Arab securities broker societies, Union of Arab Banks, auditing and chartered accountant institutions, rating institutions, and the leading one hundred Arab general joint-stock companies listed in the capital markets and other professional societies relevant with this vital sector. He indicated that the UAE will continue supporting the UASA s activities, and we are pleased to renew invite to the Arab authorities which are not members of the UASA to join soon in order to consolidate efforts toward boosting such important sector which is one of the most important cornerstones o f national economy. He concluded: We are all aware of the massive challenges facing this region, and that we should cooperate and unite our efforts and Hassan :Boukanadel the Conference is the culmination of the UASA efforts in its pursuit to improve the legislative, regulatory and professional levels of markets capacities in order to achieve the aspirations of our people using science, hope, and work. Uniting efforts Hassan Boulkanadel, Chairman of the Union of Arab Securities Authorities (UASA), said that such conference was the culmination of dedicated efforts of the UASA since its inception to attain its goals, namely to improve the legislative, regulatory, and professional level of Arab capital markets and in a manner that attains fairness, efficiency, and transparency of capital markets. This can be achieved through the consolidation of efforts and mutual cooperation to reach effective levels of control over tradings in the Arab capital markets, in addition to coordination and collaboration to ensure optimum harmony and compliance with the relevant laws and systems adopted in Arab capital markets in order to protect investors and develop legislations as per the best international standards. Such goals can also be achieved through cooperation with the Arab and international organizations and unions related to the financial markets and control over them and seeking to consolidate attitudes and viewpoints of members of these forums. Boulkanadel added that the global crisis that hit the world 6 years ago indicates the importance of intensifying supervisory efforts on all local, regional, and international levels in order to regain reliability of financial markets, and provide fair, efficient, and transparent financial markets, in addition to exerting maximum efforts to build selfcapacities to ensure optimum level of protection to investors and traders in the capital markets. Rebuilding reliability of financial markets requires serious efforts to overcome the significant challenges facing capital markets whether in relation to conducting supervisory reforms to reinforce the role of financial markets in providing funding for the SMEs or contributing in reinforcing sustainable economic growth, and overcoming of short-term and mediumterm risks of liquidity and systematic risks. He added that holding such conference under the intensified international efforts seen today which aims at reinforcing the regional and international collaboration to overcome risks compromising the international economies led by the pioneering global blocs represented in the G20, Financial Stability Board (FSB), the International Organization of Securities Commissions (IOSCO), places a huge responsibility on the Arab financial markets to observe dedicated efforts to collaborate and coordinate among each other in various areas. The UASA plays a critical role in such collaboration, where several programs were implemented to reinforce collaboration and coordination amongst the UASA-member authorities and contribute in knowledge sharing Recently, the Arab securities authorities attained important achievements in control, legislation, and regulation. However, the developments and changes taking place in the global financial markets require the Arab supervisory agencies to exerts extra efforts on setting the appropriate frameworks and mechanisms to reinforce their supervisory capacities, to ensure stability and balance of Arab financial markets, considering that the performance of such markets are affected by the legislative, institutional, and regulatory factors. Within this framework, seeking to set the appropriate legislations and mechanisms to boost rules of transparency, disclosure, governance, education, and awareness, and setting the institutional frameworks required have become necessary to ensure that all bodies subject to control comply with the rules and requirements of disclosure and transparency which makes it easy for investors and traders to make 18 Awraq Maliyah Hassan Boulkanadel

20 investment decisions, and also contributes in eradicating financial illiteracy and providing fair, efficient, and transparent markets, said Boulkanadel. Mutual funds raise their allocations to UAE equities In his speech to the conference, Nadim Najjar, Managing Director - Middle East and North Africa, Thomson Reuters said we conducted a questionnaire on investment managers of 15 leading investment firms in the MENA, as part of the monthly Reuters Asset Allocation Survey. According to the survey, 53% of fund managers expect to raise their allocations to the Saudi equities, while 47% expect to increase their allocations to the UAE equities, and 40% of fund managers expect to raise their allocation to the Egyptian equities, and only 7% expect to reduce such allocations, added Najjar. He indicated that the survey results demonstrate that funds are positive on many Gulf stock markets despite the recent slide in oil prices. He noted that oil price drop to a four-year low has overshadowed our markets. If sustained for a long period, markets fear that this would cut Gulf economies current account surpluses and may push Saudi Arabia s state budget into deficit. He indicated that Gulf governments have plenty of reserves to maintain spending at high levels, and history suggests there is only a low correlation between Gulf stock markets overall performance and the oil price. Najjar said after a drought of five years, there are positive signs of a pick-up in IPO throughout the Gulf. This activity will eventually contribute to deepening the markets and attracting fresh investor interest, he added. First day s sessions: In the first day s sessions, H.E. Dr. Abdulrahman Al Hamidy, Director General and Chairman of Board of Executive Directors, Arab Monetary Fund (AMF) gave a speech. Al Hamidy said: the Arab capital markets see a special time in terms of performance as they recovered US$434 billion of their total market value, since the beginning of 2014 up until end of September The combined performance of Arab financial markets this year is better than performance of most of the other emerging markets, reflecting restoration of confidence in the Arab markets, which was represented in upgrading most of such Arab markets to the class of emerging markets. He added that the performance improved in the institutional and foreign investment in such markets. The foreign investment in the overall Arab markets continues its positive net flow (net purchase), since the beginning of 2013, following six years of negative flow. The foreign investment flow recorded net buying of nearly US$6.4 billion in the overall Arab exchanges for the first nine months of 2014, which is the highest level in this period. This certainly reflects the established confidence, and improved competiveness of Arab markets and their openness to foreign investment, in light of the steps taken by some of the Arab nations in this regard. He said that regaining of confidence in the markets of the region is reflected in the massive success of recent IPOs in the Arab markets, especially in the UAE and Saudi Arabia. It is no secret that a big part of such improved performance is due to the continuous efforts experts by the supervisory authorities over the Arab markets as they seek to adopt international standards in the areas of issuance, listing, and trading of securities, and to boost the disclosure, transparency, and corporate governance practices. The continuing and deepening of such efforts will enable our markets to reinforce protection of investors Nadim Najjar The fall in oil prices to a four-year low impacted our markets More efforts are required to develop institutional investment on Arab markets Awraq Maliyah 19 Abdulrahman Al Hamidy