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SCA is reviewing rules on money transfer, securities

The corporate watchdog, Securities and Commodities Authority or SCA is currently reviewing rules on transfer of monies, including shares and securities, and opening an investment account.

The Authority is currently reviewing some of the regulations it has issued to update them and put in place their implementation mechanisms, said Abdulla Salem Al Turifi, the chief executive officer of Securities and Commodities Authority, while talking to reporters in Dubai, where he briefed them on issues relating to MSCI Emerging Market status and its impact on share bazar and new rules and regulations to strengthen the investment activities.

Al Turifi said his authority will coordinate with regulatory bodies on some regulatory issues like regulating the transfer of monies, including securities, to and from the UAE, in addition to facilitating the issue of identification when opening a trading and investment accounts, regulating and facilitating the establishing of financial services and investment companies and or their branches.

On plans for attaining Advanced Market status, the next level after the Emerging Market Status, he said, the SCA has set up a task force to start researching and discussing the requirements of upgrading to the higher status, which may take 4-5 years.

On the merger of stock exchanges, he said everybody wants to see it happening as soon as possible.

“We are ready and capable of dealing with the situation that would be decided either the merger or any other decision that would be taken in this regard,” the SCA chief executive officer told reporters.

The merger of two markets will have many advantages, although the SCA has not seen any negative aspects of having two markets, either, the chief executive said.

The authority would support any merger decision and “we are ready for whatever decision that would be made in this regard. We hope this will be made very soon.”

IPOs: With the emerging market status, the SCA has seen “a steady growth in trading volume and have noticed increasing involvement of corporate investors like local and foreign funds and portfolios on the two markets.

He expected a significant rise in IPOs in the last quarter of the year.

On expectations from MSCI graduation, Al Turifi said the impact of having investment cash inflow into the markets may happen in phases, as corporate investors make their investment decisions focusing on medium and long-term profit.

SCA chief expected new investments worth “several billions of Dirhams in the medium term, taking into consideration the performance of UAE markets being among the best in the world this year, with the Emirates Securities Market Index having recorded a high of 38 per cent, since the beginning of 2013.”

On the issue of hot money that can enter into the UAE financial system following the MSCI graduation, Al Turifi said the regulators have put in place mechanism to check the dangers of fast entry and exit of capitals and ensure they don’t aim at creating intentionally trouble in the country’s market mechanisms. “We have a strong regulatory tools and mechanisms that can identify and trace these cases. I believe the upgrading of our markets will contribute in the inflow of more long-term investments including mutual funds and portfolios which aim at benefiting from the companies; investment opportunities and great performance, “SCA chief executive said.

On bigger players hurting the small investors, he said investors have learnt a lesson from the global financial crisis by learning the right time to enter and exit the market, he said.

“Many other individual investors have also realised that it is better to invest through the mutual funds since they are not well experienced and lack the basics of trading on the market,” he said.

Generally, the rate of corporate investment has risen significantly, which would reach 50 per cent in the near future so that “we witness a steady fall in the rate of individual investment, in addition to having more investors with rich experience,” Al Turifi said.

Al Turifi hoped the upgrading of UAE markets by the MSCI Index would boost the steady rise in the rate of corporate investment in the local markets.

— haseeb@khaleejtimes.com