Securities and Commodities Authority (SCA)

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About SCA

Securities and Commodities Authority (SCA) is responsible for regulating the fund and investment industry of the UAE, including investment advisory firms

Since its inception, SCA has been keen on putting the objectives stated in the Federal Law No. (4) of 2000 into effect by sparing no effort to strengthen the legislative structure through issuing such regulations and instructions that ensure the development of the organizational and supervisory framework of promoters of funds, joint-stock companies and other companies operating in the securities field.

TYPES OF LICENSES

FINANCIAL CONSULTANT, ANALYST, PLANNER (“FCAP”)
The FCAP licence was traditionally limited to: Financial Consultation: Opinions and recommendations based on economic and financial research, studies and analyses concerning feasibility and determining the anticipated current or future values of the Securities, Commodities, commodity contracts and companies to be provided to clients or published to the public in any means of publication and communication; and Financial Analysis: Compiling the data and information of the company’s financial statements, and examining such data and information in a detailed and accurate manner to illustrate the elements of the statements and the extent of correlation among them.

Notwithstanding the ‘official’ scope of the licence, it was widely accepted as the appropriate licence for the financial advisory business. SCA recognised the need to align the licence closer to its intended purpose and in 2016 added the ‘financial planning’ activity described as follows: Financial Planning: A comprehensive assessment of the current and future financial position of a person through the use of variables known in the present time in order to forecast the future cash flows to help the customer develop a detailed strategy or a financial plan associated with investment in securities, commodities or commodities contracts to achieve the customer’s financial goals. The FCAP licence is now considered the primary licence for financial advisory and financial planning in the onshore UAE market. Licensees are authorised to advise on most savings and investment products with the exceptions of (i) insurance and (ii) banking products.

WEALTH MANAGER
The Wealth Manager licence is primarily directed at businesses wishing to conduct professional asset/wealth/fund management activities in the UAE. Businesses carrying on discretionary asset management on behalf of investors, institutions and funds are required to hold this licence. The licence covers management activities in respect of most classes of investment products with the exceptions of (i) insurance and (ii) banking products.
FINANCIAL PROMOTER / INTRODUCER
Businesses undertaking any marketing, distribution, advertising, publication or provision of any data or information, or promotional materials relating to a financial product in and into the UAE must hold a Financial Promoter licence from SCA. Importantly, the Financial Promoter licence does not allow for the provision of financial advice to investors, it is effectively therefore a ‘business to business’ authorisation primarily used by firms looking to promote financial products to UAE financial advisors. SCA has also introduced the Financial Introducer licence category which allows for the introduction of a business or individual to a financial advisor. Where the Financial Promoter licensees are authorised to carry on introducing activities without a further licence. The Promoter/ Introducer licence applies to a wide range of financial products including securities, bonds, notes, fund units, sukuk, commodities, derivatives and any financial instruments issued by foreign issuers. Licensees cannot promote either (i) insurance or (ii) banking products.
SHARE BROKER
An SCA Share Broker is exclusively authorised to buy and sell securities on the UAE’s domestic capital markets (being the DFM, ADX and the DGCX) on behalf of individuals and businesses. The FCAP licence was traditionally limited to: Financial Consultation: Opinions and recommendations based on economic and financial research, studies and analyses concerning feasibility and determining the anticipated current or future values of the Securities, Commodities, commodity contracts and companies to be provided to clients or published to the public in any means of publication and communication; and Financial Analysis: Compiling the data and information of the company’s financial statements, and examining such data and information in a detailed and accurate manner to illustrate the elements of the statements and the extent of correlation among them.

Notwithstanding the ‘official’ scope of the licence, it was widely accepted as the appropriate licence for the financial advisory business. SCA recognised the need to align the licence closer to its intended purpose and in 2016 added the ‘financial planning’ activity described as follows: Financial Planning: A comprehensive assessment of the current and future financial position of a person through the use of variables known in the present time in order to forecast the future cash flows to help the customer develop a detailed strategy or a financial plan associated with investment in securities, commodities or commodities contracts to achieve the customer’s financial goals. The FCAP licence is now considered the primary licence for financial advisory and financial planning in the onshore UAE market. Licensees are authorised to advise on most savings and investment products with the exceptions of (i) insurance and (ii) banking products.

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