The new decision provides that the paid-up capital for trading and clearing members shall not fall below AED 30 million and that the bank guarantee provided shall not be less than AED 20 million.
A minimum net equity of 75% of the paid-up capital shall also be maintained at all times.
H.E. Eng. Sultan bin Saeed Al Mansoori, Minister of Economy and Chairman of the Board of the Securities and Commodities Authority (SCA), issued Decision No. (27/Chairman) of 2018 amending Decision No. (27) of 2014 on Securities Brokerage Regulations.
This decision complements SCA’s efforts to improve the securities sector, raise the efficiency of the capital market, and offer better investor protection. It also comes in response to proposals by a number of brokerage companies (acting as trading and clearing members) to enable them to better comply with the regulations.
The new amendments aim at sustaining brokerage companies that bring added value and obliging them to maintain a strong financial standing.
As such, Article (1) of the new decision provides that Clause (4) of Article (4/First) of the SCA Board Chairman’s Decision No. (27) of 2014 on Securities Brokerage Regulations shall be amended so as to read as follows:
“The paid-up capital shall not fall below AED 3 million for a Brokerage Company acting as a Trading Member and AED 30 million for a Brokerage Company acting as a Trading and Clearing Member”.
Moreover, Article (2) of the same decision provides that Clause (12) shall be added to Article (4/First) of the SCA Board Chairman’s Decision No. (27) of 2014 on Securities Brokerage Regulations to read as follows:
“Maintaining at all times a net equity of no less than 75% of the paid-up capital”.
Finally, Article (3) of the decision provides that Clause (4) of Article (11) of the SCA Board Chairman’s Decision No. (27) of 2014 on Securities Brokerage Regulations shall be amended so as to read as follows:
“The bank guarantee shall not be less than AED 1 million for a Brokerage Company acting as a Trading Member and AED 20 million for a Brokerage Company acting as a Trading and Clearing Member”.
It is worth mentioning that Article (3) of the amending decision will enter into force on the day following its publication in the Official Gazette. Articles (1) and (2), however, will be in effect three months following the decision’s publication in the Gazette.
