Securities and Commodities Authority (SCA) in the UAE

The new Rulebook issued by the UAE Securities and Commodities Authority (SCA) has entered into force and has introduced a grace period of one year, expiring on 17 May 2022 for current SCA licence holders to upgrade their existing financial services licence for activities conducted in or from the UAE (excluding the financial free zones of the Dubai International Financial Centre and the Abu Dhabi Global Market). Any new applicants for an SCA licence will be required to apply under the new licensing regime.

SCA will now divide all licensed financial activities into five categories, which are provided as:

Category 1: Dealing in securities
Category 2: Dealing in investments
Category 3: Custody, clearing and registration
Category 4: Credit rating
Category 5: Arrangement and advice

In addition to the new licensing categories, applicants will be required to follow the initial approval application process that seeks to provide applicants with a decision on their licensing application within 30 days from the date of submission. In a welcome development, the SCA will provide details of any rationale for rejection, permitting applicants to remedy any failings in the application and resubmit for licensing approval.

Within the new initial application process, applicants will be required to demonstrate that they satisfy the Evaluation Criteria for approval. This Evaluation Criteria applies to all applicants and involves an assessment of:

• financial capacity;
• experience and competence;
• honesty and integrity;
• compliance;
• absence of rejection by other regulatory authorities;
• feasibility study and business plan;
• availability of adequate resources; and
• suitability of directors and managers.

The new Rulebook provides welcome clarity to the application process and requirements for any applicant, including but not limited to internal frameworks related to governance, management, employment, conduct, risk management and technical systems.

For any assistance with SCA’s new licensing regime, or any other queries regarding how the new SCA Rulebook may impact you, please contact Muneer Khan or Adam Wolstenholme.