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Securities and Commodities Authority Sees More Listings in Year Ahead

“We hope this year; the financial markets will see a better ‘situation’. We see a better performance. Especially from companies, with encouraging financial performance,” said Abdullah Salem Al Turifi, the chief executive officer of the Authority, told reporters, on the sidelines of a conference organised by the SCA to celebrate its tenth anniversary, in the capital. The chief executive said that the Authority will release new investment tools within the year. He didn’t elaborate further on their nature and timelines.

The head of nation’s corporate regulator expected continuation of the mergers of brokerage companies that had tough times last year, when the financial crisis eroded their business volumes. He said the last year saw many brokerage firms withdraw from the market or cancel their licenses, because of the situation in the stock markets, as volumes of trade in past 3-5 months 
reduced substantially.

The CEO said many of those brokerage companies were launched with huge market growth expectations. “Many of them find it difficult to survive in the situation,” Al Turifi said.

He expected same trend to follow this year also, adding not necessarily because the Authority tightened the regulatory framework but the trading volumes went to low levels, making many small brokerage firms 
financial unviable.

Earlier, he told the Financial Markets Regulators Summit that the Authority faced initial resistance to disclosures and transparency rules by the companies. Dr. Nasser Saidi, Executive Director of Dubai- based Hawkamah said the underlying problem of financial crisis was governance, with failures occurring on the senior management, board and regulatory and supervisory levels.

“Gulf regulators need to ensure effective implementation in three key areas: transparency and disclosure, risk management and board practices,” he told the Summit. He said that the capital market authorities in the Gulf have issued their own corporate governance codes including the UAE’s corporate governance code issued by the Securities and Commodities Authority which takes effect in April 2010.

Dr Saidi asked the regulators to focus on implementation also. “Mandatory corporate governance standards need to be effectively enforced by regulators through mechanisms such as the development of dedicated corporate governance departments that will monitor and ensure compliance in the entities they are supervising,” he said.

He said the boards must comprise of capable and competent professional directors. Dr Saidi said that the regulators themselves need to ensure that they are both transparent and accountable and that they are not subject to political intervention or ‘regulatory capture’.

haseeb@khaleejtimes.com