SCA regulates clearing activities on capital markets

The Securities and Commodities Authority has announced a draft resolution on the practice of clearing activities on UAE capital markets, urging all parities concerned to send their feedback on the draft not later than September 17th, 2017, before its entry into force.

According to the draft, which excluded UAE banks and branches of licensed foreign banks, an NOC from the UAE Central Bank is a must to approve a clearing activity besides the provision of all needed IT infrastructure, a convenient location, qualified staff, and an internal supervisory guidebook to ensure full application of all relevant rules and regulations.

The 11-article draft stipulates that a payment of AED50,000 is required to get an SCA approval of a clearing activity in addition to providing a collateral in form of either a letter of bank guarantee or a financial amount, with the possibility of providing both options, in order to ensure fulfilment of a clearing agent's commitments to clients.

As per the resolution, the SCA shall oversee on a regular basis or without notice the activities of clearing agents in order to ensure their compliance to all relevant laws and regulations and investigate into all possible violations and complaints.

SCA, as per the resolution, shall take all necessary measures against potential violators, ranging between warning, suspension by no more than two months and disqualification.