Glossary

Securities and Commodities Authority (SCA)

The Securities and Commodities Authority (SCA) is a government organization in the United Arab Emirates. It operates as a functionally and financially separate entity from the federal government in the UAE. Even so, the President appoints the Chairman of the Board and the CEO. The organization oversees the financial markets in the UAE but generally has no jurisdiction in the free economic zones.

The History of Securities and Commodities Authority

The UAE government established the SCA in 2001 to regulate and supervise all activities related to securities and commodities trading within the UAE. Shortly after its creation, the country’s first two exchange markets followed suit: the Dubai Financial Market and the Abu Dhabi Securities Exchange.

In 2006, it received some amendments via Federal Law 25. The changes imposed some new restrictions on board members. Specifically, it required them to disclose stocks or securities owned by themselves or family members, including minors. The amendment also reduced the number of board members from eight to five.

The Purpose of Securities and Commodities Authority

Its primary focus is on preventing money laundering and financial crimes and ensuring transparency in these markets. It is also responsible for protecting investors, ensuring that the companies listed on the exchanges are reliable, and not manipulating the market. In addition, the SCA supervises all players in the financial markets to ensure their compliance with local laws and regulations.

The SCA also provides accreditation to members who undergo a challenging qualification process. Entities that successfully complete the necessary steps become accredited custodians and brokers. This rigorous process protects investors and their capital investments.

Several departments make up the SCA. Each one gives greater insight into the different functions the SCA undertakes:

  • Supervision
  • Enforcement
  • Human resources and financial affairs
  • Research and technical support
  • Commodities
  • Issues and disclosure

Entities Governed by the Securities and Commodities Authority

The SCA regulates all entities involved in securities or commodities trading within the UAE. Here are some examples:

  • Stock exchanges
  • Investment firms
  • Brokers
  • Custodians
  • Asset managers
  • Banks

The Benefits of the Securities and Commodities Authority

Most financial professionals agree that regulations and fair enforcement play a critical role in preserving the integrity of the markets. Understanding those benefits can give managers and everyday workers a greater appreciation for compliance efforts:

  • Protection of Investors: The UAE primarily established the SCA to protect investors. Its regulations help prevent market players from taking advantage of consumers and ensure that companies listed on the exchange follow legal guidelines.
  • Safe Investment Environment: Regulations also provide a safe environment for investment. Setting rules creates a more secure and transparent market, which can increase investor confidence.
  • Transparency: The SCA makes it easier for investors to make informed decisions about their investments. With rules and regulations in place, investors can trust that companies are not manipulating the markets to benefit themselves or other stakeholders.
  • Fairness: By ensuring that all market players receive fair treatment, the SCA helps create a level playing field. It allows all investors to have an opportunity to make money off their investments and not just those who have connections or access to privileged information.
  • Professionalism: The rules and regulations set by the SCA ensure that members maintain high levels of professionalism. This, in turn, allows for more reliability and trustworthiness among market players and consumers.

SCA Compliance Challenges for Entities in Dubai

The Securities and Commodities Authority regulations have become increasingly complex for entities in Dubai. This results from a higher level of economic sophistication in the UAE than in other countries in the region. As such, companies must comply with more stringent rules and regulations that require specialized knowledge and expertise.

In addition, SCA regulations are constantly evolving. Entities must keep up with the latest developments and adjust their practices accordingly. This often requires them to have a dedicated team of professionals who can monitor changes in the regulations and develop strategies to ensure compliance. It also requires organizations to invest resources in training staff, updating systems and processes, and developing internal controls to mitigate risk.

Finally, the SCA also requires entities to demonstrate their compliance with its regulations through periodic audits and compliance assessments. This means that companies must have a comprehensive understanding of all relevant laws and regulations to ensure compliance. Failure to do so can result in fines or sanctions imposed by the SCA.

The Role Capturing and Archiving Solutions Play in SCA Compliance

Message capturing and archiving solutions can play an essential role in helping entities meet SCA requirements. By archiving critical documents, companies can ensure that they have all necessary records readily available for audits and compliance assessments. Despite the importance of these documents, they often make the rounds in the company via chat apps. Consequently, capturing and archiving those communications preserves the records while also ensuring secure storage.

LeapXpert has spent years perfecting a capturing and archiving solution that preserves text messages, and voice calls for our clients. Are you ready to upgrade your archiving solutions for operations in the Middle East and the rest of the world? Contact our team for more information.